Ouch! That is always hard to hear. Recently I saw a blog post where one friend had invited a large group to a children's museum and we were not on the list. We hadn't had them to birthday parties for a few years (kids ages don't line up), but we are friends and I was surprised at some of the people they had invited before us. I left it alone. The big difference here is that the mom and I are better friends than our kids are.
On the other hand, I know I've done the same to others. My daughters' birthdays are 3 1/2 weeks apart and the oldest gets the second mom-is-tired-of-parties, party. Two years ago we took three friends with us to the pool. Last year (I was pregnant with twins, but I threw a better one for her sister) we took one friend to an arcade and pizza. She's going into third grade and we are finally having a larger group party this year. BUT, after a lot of discussion, we decided no church friends. So even with 8 kids invited, we can easily hurt some feelings.
We've lived in our town for 9 years. We have library friends, church friends, preschool friends, neighborhood friends, school friends, soccer friends, girl scout friends...
When my oldest was 5 I tried to invite everyone. It was crazy and I didn't enjoy it-part of the reason I've been doing smaller parties for the last few years.
I don't know how you know each other, if your kids go to school together... so it's hard to give advice. But this probably won't be the first time it happens, so take the time to set a precedent, what you will do in the future. Good luck.