DECORATIONS:
 

Cover you table with green butcher paper and fray the edges to resemble a grass skirt.
Use pineapples to decorate tables and use them later in the evening as dessert.
Use flower petals or small sea shells (I have seen them at Walmart) to garnish the buffet table.  You could also go to the dollar store and see if they have any tropical confetti like palm trees, flamingos, tropical birds, and tropical fish.
Oriental Trading - the most inexpensive place to find traditional festive luau party decorations.
Make surf boards and ukuleles with masonite board.  You could make them with cardboard and paint them.
Make a waterfall with blue plastic cascading down.
Palm Tree Decorations - Use cardboard tubes that carpet stores receive carpet rolls on. Paint the tubes brownish/tan and make little lines of darker brown around them to make them resemble the trunk of a palm tree.  Then take green plastic table covers (the cheap kind, basically just a sheet of thin plastic) and fold the table cloth into 4ths and trace around a pattern for a palm branch and cut it out. That way you can  make four at a time. Then cut in from the outside edges of the branches toward the middle a few inches to make the individual little 'leaves' on each one. Down the center of each large leaf, use green duct tape and tape on a heavy gauge wire (hanger) that would support the branches, leaving about 3 or 4 inches of extra wire sticking off one end of the branch. Drill small holes in the top of the carpet tube.  Glue a Styrofoam ball, the same diameter as the tube or as close as you can get to it. Then stick the wires from the branches into the ball inside the tube.  You can either wire it to the basketball standard or put the base in a large bucket or planter filled with something to hold it up (maybe a Christmas tree stand).
Also try cut fruit centerpieces such as pineapple boats, or stacked dishes of cut fruit. Use tropical food picks.
Fishnets, Hawaiian print fabric, coconut ukuleles or other coconut sculptures can be used creatively for table decorations. Baskets can be used to hold plastic utensils and/or napkins. Fishnets can also be hung from ceilings and doorways.

GUESTS ARRIVE:
 

If you think you have the time, stand at the door and greet everyone with a lei--this is always a nice gesture and a traditional way of saying aloha.

OPTIONAL:

Name Tags - Go to your local dollar store and see if you can find sand dollars, starfish or even thong sandals (rubber kind you wear on your feet that have a flower in the middle).  They make for a great nametag or seating card. Just write the name in magic marker, add a piece of ribbon or string and voila--a humorous way to get people talking.

Costumes - Invite everyone to come dressed in Hawaiian attire by saying "Don't forget to dress in your luau best!"  You can make grass skirts for all of those in charge or on your committee from draw string garbage bags. Cut straws in 1" pieces and alternate stringing with paper flowers on dental floss to create a lei. Hula, surf, and eat pineapple fruit kabobs for snack.

FOOD IDEAS:

When I did this, we made Hawaiian Haystacks and made the rice and each of the families signed up to bring toppings for the rice (gravy, pineapple, chow mien noodles, etc.) It was a huge hit! I just put all the toppings out on the tables and everyone helped themselves. 
Tropical fruits (mango, pineapple, kiwi, grapes, watermelon and star fruit)
Vegetable kabobs
Goldfish crackers
Macadamia Nuts
Dessert could be pineapple upside down cake or fresh pineapple.
Hula Dancer Cake

ACTIVITIES:

Citrus race - Two people on a team, each team would have to get an orange from the bowl and place it on their partners forehead, then press foreheads together and get to the empty bowl at the finish line, without using hands.
Music - Good luau music not only sets the mood but you can use it to learn the Hula or Limbo.  Check your local library.  They usually have a wide selection of music.
Relay - Divide the group into teams.  Each team needs: a Grass skirt, pair of Bermuda shorts, pair of sunglasses, straw hat, lei, beach bag,  and a lawn chair.  Each team lines up in a row. Place chairs a reasonable running distance in front of each team or any distance your space will allow. The objects listed above are placed into the beach bags and located with each team. The first players on each team, put on ALL of the items, run to the chair, return to their team, remove the items and pass the bag to the next player. The next players continue until the entire team has had a turn.
Lip-sync Don Ho songs such as Tiny Bubbles or Pearly Shells.
More Fun Hawaiian Luau Games
One thing that we did that turned out to be a hit was to take some butcher paper and draw a Hawaiian scene on it (palm trees, ocean, sun, etc.) and write the words, "Welcome to Paradise!"  Then have two people dress very authentically and ask every family (as they arrive) to step on over for a little photo shoot.  It was awesome to deliver a picture of each of the families with their leis and beautiful smiles to hang on their fridges.
 

OTHER:

History of the Luau