For my daughter's 2nd birthday party we used an Elmo and Sesame Street theme.
I took a photo of her in an Elmo outfit (jean jumper with Elmo on it and a matching shirt) holding a HUGE stuffed Elmo. I used that picture for the front of the invitations and then printed the inside with the wording and RSVP info. I used American Greetings Create and Print to do the invite. I took a digital picture of just the stuffed Elmo and used that for a return address label with "It's Elizabeth's Birthday!" as the heading. I printed the envelopes in red ink and used Happy Birthday stamps. We had about 65 adults and about 30 children so I rented a banquet hall facility with 2 rooms - one for food and eating tables and one for games. We decorated the tables with primary color table clothes (red, green, yellow, blue - like Sesame Street) and then used contrasting napkins. The centerpieces were fish bowls with "Dorothy" in them ... plastic goldfish bowls with colored glass stones and goldfish (Pet Smart or some similar place can help with this...I preordered the bowls and the fish). I also found some plastic balloon cupcake picks that floated in the fish bowls to give them a party look. Our other decorations were normal Party City like items - banners, balloons, etc. Elmo did come to visit and danced to music - gave out some favors - and helped sing Happy Birthday. We had several games and activities...coloring pages for the littles kids and crayons scattered on a low table...alphabet foam mats for the kids to play on...a moon bounce..."rubber ducky" game which was basically a duck pond...pinata with candy...and 2 guessing games - one for adults: guess the # of chocolate chip cookies and I put a cut out of Cookie Monster on the jar and guess the # of crayons for the kids and I put a cut out of Elmo on the jar. I also bought several bright colored balls and left the children play with those in the hall. We used a CD player for music and played various toddler tunes. On each table I placed some pens and a copy of T is for Trvia - a 20 question Sesame Street trivia quiz. I took these questions from the www.sesamestreet.com site. For goodie bags I used large red plastic cups (dollar store) and filled them age appropriate items. For infants, I filled with a Sesame Street bib, some baby food, baby eating utensils, small jars of juice and a little stuffed Elmo. For toddlers, I used Elmo snacks, Elmo stickers, Elmo note pads abd other small Elmo items. For older children I added small race cars, play jewelry, etc. I did have all the children get McDonald treat certificates and Rita's Italian Ice certificates. A friend of mine also made Elmo candy lollipops that we placed in each treat cup. I also used packs of KoolAid and similar powdered drink packets for the cups. I wrapped the cups with saran wrap, tied with a red ribbon and used the invitation photo on a small label with the child's name and "Elmo and Elizabeth are happy you came to my party! Thank you for celebrating with us!" on it. Most of the treat items were from the dollar store, grocery store or Babies R Us. We arranged all the treat cups on a round table and placed a big Elmo in the middle with some balloons. The banquet hall took care of the food and serving it (turkey BBQ, potato pancakes, meatballs, baked beans, pizza)...we had a local bakery make an Elmo cake (to look like the napkins and plates) and then a few dozen cupcakes for the kids to take home. I also had some primary colored cookie dough that I made cookies with (E's and 2's) and decorated them with ABC and 123 sprinkles. One of the things that helped me organize was an 8 pocket file folder and excel spreadsheets. The file folder was great for keeping copies of receipts, bills, extra invites, stickers, etc. I used the spreadsheets to keep track of the invite list and then RSVPs. I also used it to show how many children and what ages they were. This helped tremendously with getting the treat bags together. We all had a great time! Even the servers at the banquet hall were impressed!