D.W.
A.,
I am the mean woman/mom who has done away w/ goodie bags. When the kids are a bit older we have done crafts and everyone takes theirs. Most of the "stuff" ends up in the trash anyway.
Since everyone is so young I would do cake and gifts first, watch Elmo and leave- that way people can still get home to make dinner.
The cutest Thank you Cards I have seen were ones made by a mom w/ a digital camera and a color printer. She took pics of the guests w/ the b-day child and printed it, folded the paper into quarters and wrote a nice note inside.
Keep it as simple as possible so you can enjoy the party too!