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Decorating Christmas cookies! You can use BC icing or make your own. Coffee cups for colors, or you can go to Micheals and get the little triangular bags and fill them for each table with ties on the ends. We did for 6th Graders and they thought it was great fun. Dough mix in pouches from Kroger, worked great, or you can ask the bakery to make you up some sugar cookies, if you are willing to pay more. Also there are those little shaped cookies from Pillsbury around Christmas time for sale near the milk and cheese.
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Check out Oriental Trading Company for some good ideas and craft projects. They'll have good deals for bulk purchase as well.
Last year my son's class did an ornament for the parents. They got the kids' school pictures from the office (or you could do digital shots if you are allowed) and they used that to put on the ornament when they decorated with the school year on it. My kid loved it because he had a gift to give us on Christmas morning.:)
Other things my kids have done...
gumdrop trees with toothpicks, clove oranges, marshmallow snowmens etc.
For the activities and not crafts - trivia games about the holiday season (which can cover Hannukah, Kwanzaa etc), candy cane relay race, decorate a small tree while blindfolded, guess the red & green m&m's in a jar (winner takes jar home).
Most times our parties are too short for anything too complicated. So I'd suggest one game & one craft or just do one thing so they have time to eat and mingle.