I have 3 kids - ages 13, 11, and 4; and I live with another family who has an 11 year old daughter.
That being said? Keep it simple! :) I wouldn't do something like Chuck E. Cheese yet. The rides and games aren't really appropriate for a 2 year old, thus they won't have as much fun, the kids will get bored and ansty faster...it is easier to have it at home, at the Y in the community room or at some other community room type area.
For us, since we don't have a lot of family in the area, birthdays are a time for our close friends to get together since they share as much in the joys of our kids growing up as we do. The kids have a blast playing with each other, the grown ups chit chat, and voila - stress free party :) As the kids get older, more effort and planning goes into the party - but for the under 5 crew? It's more of an excuse for another gathering, but this time with cake and presents!
As far as whether or not your son would remember his 2nd birthday? Don't underestimate him. My 4 year old just surprised me last night with a gem of a memory from when he was under 2...and my 13 year old still remembers events from when she was under 3-4. The less stress you put on yourself, though, the more fun *he* will have - and *that's* what will make it a good birthday party.