Ditto Lulumama.
Send a note back as RSVP.
DD would love to come, we're a bit low on funds too so we'll bring a plate of food - would you prefer sandwiches or cakes?
Depends whether you want your dd to go or not. She isn't going to notice if she doesn't, is she?
2-yr-old parties are just get-togethers for the mums, surely?
And presents - I buy a pack of 10 books for £10 (or £5 sometimes) from the Book People. Couple of books per party - looks good, doesn't cost much, and has got to be better than the pile of plastic, I think. Although eldest dc is 5 and loves books, perhaps all her friends hate me now...