DS1 is 5, went to a party of an 8yo boy this last weekend. Had a fab time, they...
rented out a scout hut and grounds ("donations only") so very cheap, but a self-contained area (safe to let the kids run around).
big green area to kick footballs around.
The parents also rented 2 small bouncy castles, one indoor, one outdoor.
Traditional party games were played (including musical chairs and a treasure hunt).
Instead of party bags, there was a lucky dip at the end for a small bundle of wrapped items (erasor, ruler & notepad).
The dad is into Army stuff, and parked his old-fashioned style open-sided jeep in a corner of the field; the boys were in and out of it like fleas on/off a dying cat's corpse.
Except for the bouncy castles the whole thing was done very much on the cheap.
Church- and village-halls can often be hired out for a pittance, too.