He needs his party. He has tough consequences and an awful lot of negative attention... it's no wonder he is acting out. The time out facing the wall until dinner and then going to bed after dinner is an extremely long time for punishment and isn't teaching him anything, especially for his age. It's is well known that withholding positive attention for long periods of time such as this can create adverse reactions in children. As you already now, this punishment isn't working at all, and is probably doing more damage psychologically than good. Positive reinforcement, and being fully engaged with plenty of family time is the absolute best way for him to learn to behave and to want to please people and develop inner control. Canceling the party will be difficult and embarrassing for him and the kids and he will probably react with withdrawing more and more behavior problems from being austracised by the children.
You gave him a reward for positive behavior, then took it away when he messed up... at this rate, he feels like he is a failure at all he does and eventually, he will give up trying to be good at all. Perhaps another discipline would be best for this behavior, but he absolutely needs positive reinforcement and the ability to trust that you are going to give him the rewards you promise when he meets those expectations, without having the rug pulled out from under him after the fact. It's a shame you have more sympathy for the other children than you do for your own son.
I really think this discipline book will help you and him both, as well as in his social and educational settings. Play therapy has worked wonders with disruptive children, perhaps he needs something like this.
Discipline Book by Dr. Sears
http://www.amazon.com/Discipline-Book-Better-Behaved-Chil...
many of the things in the book can be read here:
http://www.askdrsears.com/html/6/T060100.asp
Playful Parenting by Lawrence J. Cohen
http://www.amazon.com/Playful-Parenting-Lawrence-J-Cohen/...
As for the teacher, maybe he needs to be with a more experienced teacher who understands how to teach and work with disruptive or high energy children? If he is having a very difficult time, maybe he needs to have a behavioral therapist or school counselor work with him, or be evaluated for any behavioral problems so that he can get professional help. One thing that is tough, is that once a child is labeled as difficult, they get punished for every single thing, even if other 'good' kids get away with it. Maybe you need a conference with the teacher on things you can do together to help. If she situates his desk next to hers, and really keeps him hands on as a special helper, it usually helps with a lot of the disruptions.
Personally, I feel sorry for your son, he seems like he needs a giant hug and encouragement, and praise for what he does good, instead of withdrawal of love as he sits at the wall all day long, then gets sent to bed after dinner. I guarantee you, that if you work on helping him with his behavior and use plenty of positive reinforcement and a rewards system, as well as give him plenty of activities after he gets home from school to spend his energy and work on crafts, and how to behave in places like a museum, libraries..., then his behavior will improve.