My daughter wants to do this for her birthday - IN SEPTEMBER! Yes, she started planning this year one day after her birthday last year. She'll be 8 - IN SEPTEMBER! Anyway:
Decorating a sleeping bag is a cute idea. I made 7 sleeping bags and pillow for Christmas this year (between my daughter and niece) and it cost me about $20 - the most expensive part being 7 zippers! You could have the sleeping bags done and then give the girls a sheet of iron-on transfer paper for them to color on, write the dolls' names, give them stencils, etc. Have them cut out everything and position onto the bag with straight pins or even a piece of scotch tape. During cake or down time (or a great job for another mom or aunt or gramma who's helping) you can iron it all on very easily.
The girls could make jewerly for the dolls - or matching one for girl/one for doll jewelery. Buy lots of beads, elastic string, etc. for necklaces, bracelets, belts, hair stuff.
The cake can be a giant book with your daughter's doll's name on it. Easy to make - big square pan and outline a cover on the top. You could even Xerox and enlarge the cover of her favorite book, cover it in saran wrap and place it on top of the cake as if it is the cover.
A tea party is very cute and may be one the idea on the site. It may be a little pricey to find a few small tables and chairs to fit the dolls. If you can find the chairs for a decent price the girls could decorate the chairs with markers with their dolls' names, stickers, decals, etc. and then the dolls can sit in them and the girls can take them home as a favor. Kills 2 birds with one stone - craft activity and goody favor!
Do you sew? You could make a simple matching jumper for each doll (or one color for each) Then they could dress up the dolls and do a 'fashion show'. Get a bunch of accessories at the craft store - boas, hats, belts, purses - cheapy stuff that they can either take home or your daughter can keep and play with.
Games - I'm not good with games! If they are all 'into' AG, then maybe you could make up a sheet with questions about each doll and they have to fill in the blanks. If they don't all read or read well, you could dictate the questions and have a sheet posted on the wall with all the dolls' names clearly spelled out. Find obscure details about each of the dolls, especially the ones they come with. Keep it really general on the dolls that they don't have.
Play one of the movies on the DVD if the girls will be working on a craft in an area with a television. Some kids work long and hard on something like that while others may finish quicker. This way no one is pressured to finish before they're ready (within reason!) and the earlier-finishers won't be bored.
Pin The Outfit On The Girl - OK, I'm going with stream of consciousness at this point! Xerox and enlarge your daughter's favorite doll paper dolls, alot of sets are available on-line and I've even seen them at Costco. Make the doll and clothes big, hang the doll on the wall and have the girls decorate it with different dresses, hats, etc. Even get clothes pictures from other dolls that are radically different so the doll gets different looks. Imagine Julie wearing Kaya's clothes.
I can probably think of more stuff. I have 8 months left to plan my own daughter's, but she talks about it and ideas at least once a week! hee heeeee
Most of all, have fun. Hey - have you asked your daughter if she has any ideas?