My roomate and I are throwing a Christmas party as well (but think more drunken debauchery than cookie decorating and sledding )
We're going for a super cheesy Christmas theme, like enouraging people to wear crazy christmas sweaters or show up dressed as the three wisemen or baby jesus. alternatively, our backup plan was a fancy dress christmas party. those are always fun too.
as far as decorations go we bought a ton of christmas lights and are stringing them up through the whole apartment. i'm going to buy christmas bulbs and hang them from the lights so there's more shiny stuff going on. then we bought a mini tree (a real tree was not within our budget) and stockings to hang up, and we might make some sort of christmas themed poster for the walls. and since we have a red couch, we might use that as a set up for fake family christmas portraits of the guests.