(people would faint if they saw what I did for my son's first communion).
Your money, your child, your party. Don't worry about what anyone else thinks.
I have a small house, I can't host a large family grouping. In Italian families (at least in mine) celebrating a sacrament is a big deal. It is also an excuse for family to get together. I had the hall, the DJ, the favors. We had a blast. I had the money, I paid for it. No one should tell me I should not have done it.
The party will not minimize the sacrament your child is celebrating. What is right for one family, is not right for another. Do what you feel is right.