As your child grows up, you can arrange for more complicated and exciting art projects. A group of girls might enjoy jewelry making. A party with boys and girls might gravitate to a more open-ended artistic endeavor. You can arrange to have the kids create a group banner or individual projects, depending on your guest list. Note on the invitation that this is an art party so that guests will be dressed appropriately.
Game: Pictionary. Have your guests show off their drawing skills by having them break up into teams and play this game of artful charades. Be sure to pick very basic clues so that the young artists won't be too stumped.
Party favor: Paint or pencil sets.