This has made for a very interesting thread and discussion. My DS#1 is 11 1/2, so I'm going to be facing this issue very soon.
I think we (and that's a collective we, not anyone in particular) need to be honest with ourselves. We can talk all day about risks, and pregnancy, and diseases, but in the end, most people are just plain uncomfortable thinking about their children having sex. Having been raised with the whole "Madonna/Whore" dichotomy, I can fully admit to my own hang ups with the idea that someday, probably VERY SOON, my ds will be doing some of the things I've done in bed. And I've enjoyed them! But I was taught not to. My mother lied to me and said that my father was the only man she had ever been with, and I found out it was a lie because she had been married to another man as a teenager. I found her divorce decree and she admitted it. But she had always held up this idea that waiting until marriage for sex was the only way. It really affected the trust in our relationship.
Lots of posters are comparing sex to drugs and alcohol, but I suggest a different comparison. Driving.
So, most teenagers (even ours) will start driving around the age of 16. It's risky. There is a (high) chance of death or life-long disability. There is a chance of litigation. There is a chance that through no fault of their own, even if they do everything right, they will be involved in an accident. However, we (collective we) don't run around saying that everyone should only drive when they can accept every consequence of driving. We don't make people wait until their married, or a college graduate. We let teenagers drive, even if the hours and rules are limited.
So what do we do as parents? We make our children take driver's ed. We make them watch scary news stories about car accidents. We show them statistics about drinking and driving, and tell them that they can always call us for a ride for any reason. Then we hand the keys over, clutch our hearts, say a prayer, and watch them drive away because we realize our children are becoming more adult, and less child.
Sex is different- it's intimate, it's private, it's so good, but it's bad, too, at least that's what we've been taught. We are afraid of the risks of disease and pregnancy, but I think we are really just freaked out about the idea that our children will be having sex. I know I am freaked out by it. So many people on this thread have said, "Well, when I was a teenager I was doing XYZ, but my ds/dd shouldn't!" I bet a lot of our parents said the exact same thing about us!
Teenage sex has risks. Teenage driving has risks, many even greater risks. But teenage driving is culturally acceptable, and may even be necessary in some circumstances. Teenage sex is NOT culturally acceptable, yet is still going to happen. It is fine to have values, and try to instill those values into your children. We want to protect them. But, we cannot control them, especially when they become teenagers. So, we should do what we do when they learn to drive- teach them what they need to know, try to mitigate the risks, and make sure they know we are available if anything bad happens. But I think we need to accept that the majority of teenagers will have sex, as they have done for centuries.
As for co-ed sleepovers- right now, my gut says no. Not only do I have my own hang-ups I'm working on, I'd be afraid of some girl's father coming and kicking my butt! But every day I'm working on my own feelings and concerns about my ds reaching sexual maturity, and I hope that I give him the proper sexual education and tools to protect himself.
And then I'll watch him leave for a date, clutch my heart, say a prayer, and remind myself that he is more adult, and less child. Even though he'll always be my baby. :-)