DD had her party at home, but in August you coudl go to a public park for free, or even use your own backyard. DD's 4th birthday was 2 hours long. We were going to follow the "as many kids as your age" rule, but she came up with a list of 6, so that was fine. When the kids first showed up, we just played with some toys while we waited for everyone to get there. We played pin the tail on the donkey and then a picture bingo game. Also, at DD's school, I noticed they were playing musical chairs, so next year we might do that too. This took most of the first our, and then we had cake and ice cream. After that, we opened presents, and the kids played with the presents for a bit, and then made necklaces with pony beads. At the end, we gave out goody bags as the kids left (do we wouldn't have that "wahhh - you got pink but I want pink" issue).
Other outside games that are fun are ring around the rosie, have a sprinkler set up and have a "water party", have a scavenger hunt - you can even use those plastic easter eggs, have a ball or two to kick, you can go to a park and the kids can use the jungle gym.
finally- the goody bags are always an issue. DD and my Mom picked out the stuff this year. DD gave out two plastic rings to each girl, a princess headband, a small bottle of "Dora" bubbles, Dora tattoos, and a jump rope. One of the girls lives next door, and that afternoon, we saw her with her mom and grandma jumping rope!