Our girls are 8 and 5 and their birthdays are two weeks apart in February, so we do one big birthday party in February for both girls, with all of their friends and family. It's a big bash. Last year, we rented a pavillion out in the park, rented a bouncehouse, and brought a bunch of food and grilled hot dogs for everybody. The year before that we had a bounce house at our house and did the same. Next year, we are thinking a carnival theme with face painting and a clown, and carnival games.
The girls are getting to that age that they want to have their party at some sort of venue with their friends. We tentatively talked about a swimming party at the YMCA for them and their friends, and then we would probably gather just family on another day for cake & ice cream, no big deal. The family party doesn't have to be expensive. Have everyone bring a dish, make a cake, eat on inexpensive disposable plates, should be fine. If you have the other party for the friends, you've already spent enough money on that one!
So in my opinion, either one big one for everybody, or two smaller ones.