Hi pianolady, it's nice of you to be concerned about your relationship with your neighbors.
Just so you are aware, most of the people in this forum are ex-JWs who have been deeply hurt by this cult and will have very little positive things to say about JWs. That is not to say we cannot give you some good advice, though. Just wanted to be honest about our points of view.
My advice is to maintain a cordial relationship that remains as distant as possible. Getting involved with them will only encourage their continued efforts to convert you. They are not allowed to socialize with people outside their religion unless they are doing so in an attempt to convert. Be wary.
Continuing to accept the literature, in their minds, is "showing interest" in their religion. This means you are encouraging them to continue attempts to convert. Your best bet is to tell them politely you no longer wish to receive the literature or to discuss religious topics with them.
If you bring up the issue of birthdays to them directly, they will view this as "opposition" which in their belief system originates with Satan. Challenging their beliefs most likely results in strengthening their resolve to adhere to their religion's rules. However, I do recommend you address this with the school. It is ridiculous for the rest of the children to miss out on birthdays. Normally, schools just allow the JW child to go to the library (or somewhere else) during an "objectionable" event.
Please also be wary about allowing your child to play with their children unless supervised by you. Your child will eventually be exposed to teachings you do not endorse.
As I said, this is a destructive cult. Please visit the following web sites for further information:
www.jwinfo.50megs.com http://www.silentlambs.org/education/index.cfm http://www.ajwrb.org/victims/index.shtml