Hi Pebbles,
I have two boys as well, 6 and almost 3. I thought the same thing that you did about parties when I first started attending and planning them.
The first few years before he was in school, I did the parties the American way. But after he started school, I tended to follow the English format. It probably seems silly, but I thought that it would be easier to manage the kids by following a known format.
In my son's school, a lot of the mums like to hire entertainers (i.e. DJ's, Puppet Shows, etc.) while the kids are still young enough. Other mums have actually had the parties at leisure centers and another had a bowling party. The one thing I've never cared for are bouncy castles. I don't know why, because the kids seem to love them. But they've never appealed to me.
I just try to make sure that the kids have enough to do so that they don't get bored which prevents things from getting out of control! And I give out BIG pieces of cake in the loot bags because in this case, bigger is better!