V.W.
Maybe it is awkward for you. But certainly not "a predicament".
I'll be honest here. When my kids were smaller/younger, I wasn't really that comfortable telling (other) little kids "no" about things, when there was no hard and fast reason outside of my control. I really did feel quite obligated to let them do what they wanted if I COULD. As I have gotten older and grown more into the "parent" role, I have come to realize that all that stress and "guilt" was my own fault.
As a child, when I went to play at a friend's down the street, if the mom greeted me at the door with "we have company right now, they can't play with you today" I would have been disappointed, but just gone and found something else to do. I wouldn't have thought the mom was "mean" or anything.
Really, I think today's parents, a lot of us anyway, get so caught up in trying to please kids, rather than letting it be o.k. to say "no". You don't even have to have a "reason"... Maybe you just don't "feel like" hosting today. That should be ok for you to say "not today", and have ZERO guilt over it.
So really.... sorry she was upset, but it shouldn't be a big deal. And if it IS, then maybe it is because we adults have let them believe that they are entitled to things that they really aren't entitled to.
Nice of you to offer the otter pop, too, but again, totally not necessary.