Cupcakes always go down a treat (even if the kids mostly lick off the icing!). I tend to do them in the baby patty size for that age.

Also savoury muffins, which can also be done in mini size - ham/cheese/chives is yummy. Or you could do some "sweet" muffins like banana or banana and choc chip.

As for the "lolly bags", adding a balloon always provides lots of fun. At Coles in their party/toy section they have a range of their own brand toys for around $2 per packet and I find that you can get great fillers there. My favourite is a pack of 5 bouncy balls for $2 (altho depending on the age of the other kids they could be a bit small). Or they also have My Little Pony copies - 2 for $2, once again better for the older kids but still perhaps worth a look. Oh and if you can find the packs of mini bubbles they are good too.