I think they were just trying to be neighborly and not asking for a gift. Maybe the party will be loud and they hope you won't complain given the invitation? I was going to have a band play at my daughter's first birthday party which I knew would be loud. I was going to have it at my parents house that they had only been at for about a year or so, and was going to invite the entire cul-de-sac even though I had never met any of them except their two immediate neighbors. I never imagined that it would be seen as a request for a gift, rather, the band was going to be so good, (and loud) I just wanted everyone to come and enjoy it if they were going to be listening to it anyway

Well, it didn't end up happening, b/c the band was so good that they were VERY expensive. We did end up hiring a singer, so I invited the two neighbors on either side, figuring those people are the ones who would be seeing and listening even if they weren't there. They did bring gifts, but that was never my intention. BUT they did have a great time with all the food and drink, and they are still the only ones we have ever met, but, we have gotten to know them better too, as a result.
Go and have a good time! Wal-Mart has these cute graduation gifts for even as little as .97, (what I bought to go with little presents for my daughter's preschool class, a stuffed smiley face with a mortar board), and Target has a gift card where the kids can download $15 worth of songs from itunes. It is kind of like giving a CD, but they get to pick the music, and if they want it on their computer/CD, or iPod.... Good luck.