I grew up on the "other side" of the birthday party. In some ways it was good for me. In others... I think it ruined me! ;-)
It started out when my mom became a clown - literally. She did face painting and balloon animals at parties and company picnics, etc. Then we started doing pony rides for those same parties. I went to ALOT of parties. I saw how much money people spent on their kids birthdays. I think its wasteful and frivolous to spend hundreds upon hundreds of dollars to throw a party every time you celebrate birthday or event. Please don't get me wrong. I enjoy entertaining. I love to celebrate special occasions with my friends and families. But I do not think you have to spend a ton of money to do that!
I think during birthdays and Christmas alike it is very easy for kids (and adults) to get overwhelmed with the gifts. The "gimme" attitude is far more likely to take over the more presents are that are given. I'd much rather
My husband and I have agreed that we will primarily celebrate our kids' birthdays with our immediate families only. We've designated 1, 5, 10, 13, 16, and 18 as milestone birthdays that we plan on having larger "friends" parties. I think its good to differentiate between the years. Its important to make every birthday special but if you make a huge deal every year is it really different from the year before?
Every family is different as is there style of parenting, of celebrating and so on. And for that matter everyone has a different financial situation that they live in. Money certainly is not our primary reason for downsizing our birthday events. But we are consciously choosing to take steps to emphasize to our children that family and relationships are more valuable than material things. And this is one of the ways that we are trying to teach them that value.