No time to read other replies, but doing decorate your own cupcakes or cookies is always a big hit! Put out a couple of bowls of frosting, and a bunch of toppings (sprinkles, mini choc chips or m&m's, colored sugar, etc.) No cake needed, and it serves as an activity too.
I usually print out free coloring sheets online to go with the theme of the party, or if no theme, just fun coloring sheets. I also take out library books that go with the theme and set them up in our playroom (for decoration, or kids who are taking a break from playing).
Not serving lunch/a meal saves $ and time. Pop up a big bowl of popcorn and slice up some veggies or fruit for a snack. Instead of juice, serve water and/or a pitcher of herbal iced tea (passion fruit makes a nice red/purple coloered one) and add some grape juice or a little sugar to sweeten.
You could do some kind of a game, like "stop and go" to music or something like that (CD you have, or one from the library).
At that age, kids just have fun playing together and running around for a couple of hours!
If you want to do favors, this site
has some really great free printables (like little boxes that you could put a piece of candy in).