Being it's your first birthday party, I would advise you keep it simple. As a general rule, you should invite as many kids as the birthday boy or girl is old. Since your daughter is turning 5, then 5 kids should be sufficient. Please note that if you're inviting classmates the invitations should be mailed and not distributed at school to spare the feelings of those who aren't invited. If you can't obtain addresses, put a return address and stamps on the envelopes and ask the school office to address and mail them for you.
Parties for 5-year olds shouldn't last more than a few hours. Once all or at least most of the guests arrive, play a few games like pin the tail on the donkey, musical chairs, duck, duck, goose, pinata, etc. If you give prizes, make sure you have goodie bags, so that all of the kids go home with something. Serve cake and ice cream before opening the gifts. For that age, additional food isn't necessary, but if you do decide to serve food keep it simple and kid friendly such as pizza, hot dogs, etc.
If you are looking to make friends with the parents of your daughter's guests, make sure it's clear that the invitation is for parent/s and child. In that case food should be served, and there should be something available that adults like to eat. Appetizers are ok. To determine amount of food needed, use RSVP on the invitation. Very few will respond, so make sure to call and verify who is attending. I don't know why, but the vast majority of people don't RSVP.
You can decorate with streamers, banners and balloons if you like, but it's not really necessary at this age. Usually that stuff is important to older kids, (around 8 or 9), but every kid is different.
If you need etiquette questions answered, recipes or any other ideas, let me know.
Jamie of the stepmom to two, grandma of four, everyone's baby shower, birthday party and holiday dinner is at my house class.