K.P.
LOVE it!
Try Googling Parents magazine and "kids party ideas" because they did an awesome layout a few years ago on EXACTLY this! The table was decorated like a bed and the craft was decorating pillow cases, which was perfect! I don't remember all of the details, but it looked like a great party and the kids will love it!
Just some thoughts...
- Flashlight tag for the older kids
- Decorating pillowcases
- Popcorn and a "movie" (cartoon)
- Pizza (if you are OK with them eating in front of the movie)
- Have them create and "tell" a spooky story