Each person who signs up has to give the email addresses for their friends and they're allowed to see the parties you list. It could send out an email much like the MSN Messenger 'someone wants to talk to you'.
For a big party you can invite the friends of your friends - social networking styles. With up to 3 or 4 degrees of separation.
As for the technical implementation I could hack up something like these opensource calendars:
Optionally have it sent out email reminders before the event so even if someone never logs in they still find out about it.
I'm thinking it should be free for everyone and add paid access to get TXT reminders.
Possibly make $ so its self sustaining by localised ads for hiring party equipment, bands, etc.
I don't think support for completely open invite parties should be added as that would get abused.
Because this can involve ppl turning up at an address the potential for abuse is high so this could be mitigated by authentication of new accounts based on another social netwroking site like livejournals OpenID or maybe you have to be invited ala Orkut.