This is one of my areas of expertise in my opinion...lol...
For birthday parties, I let them invite as many "friends" as they are old + family so it still works out to be about 15 people, if they are 5, otherwise it gets very overwhelming and the older they get the more they can tolerate.
When making the invitations, I always welcome sidekicks, aka, parents. and keep the party to 2 hours, anything more than that and the the happy birthday boy or girl becomes the whiny, tantrum, meltdown boy or girl.
Keep it simple, one game, one craft, but again a simple craft, maybe even a glitter star or planet, have pre-traced stars or planets for them to cut out and put glue and glitter on. Anything more than that and they get distracted and lose interest.
Loot bags, I agree with you, but it is nice to go home with something, so instead of something that will rot your teeth and need to be thrown out, maybe those glow in the dark stars and planets and go your walls, a few sticker and a pencil. Something useful but then they are also not leaving empty handed.
Then do cake cutting and finish with present opening, hand out loot bags on their way out the door.
I say finish with present opening because, the kids will all want to play with and open the toys, and it gets very chaotic at that point so, if its saved for last at least the kids are being picked up and there are fewer and fewer of them to deal with. Sounds harsh but you will understand after hosting a few of these.(I have 4 sons :) )
I love the idea of pinata's but I hate them at parties unless the kids are well behaved. I have had them be a complete nightmare. I had one little boy get hurt pretty bad from another one trying so hard to get a toy that he wanted that he pushed him into a chair (and I cleared the area) and the last time I did one my 3 year old got knocked down and stepped on by a 6 year old because he wanted the whistle and it was the last one, ridiculous. I won't have them at parties anymore.
Disposable dishes are the way to go, and be careful with balloons and kids that age. They pose more hazzards than you would think... (again I have 4 sons... its amazing the things I've seen??!!;) )
Good luck, and have fun!
S.