My Software Design and Design Patterns professor had a philosophy that I think fits well here. Before any sort of design effort can be started, you have to invite people to design with you. As he pointed out, a lot of times this step is sorrowfully over-looked, and people end up either not feeling appreciated, enter begrudgingly, or simple aren’t interested. As such, designing the invitation is the most important step.
In this case, I think this philosophy translates well, because the invitation sets the tone for the party. Aside from other potentially time consuming things (like personalizing the invitations), it’s very simple to make people feel wanted and welcomed and comfortable. IMO, this sort of invitation fails miserably. As was pointed out, a number of other invitees felt uncomfortable with it which means, that some people probably won’t go, and many of those that do, probably won’t enjoy themselves. Lest the hosts change their invitation, I would expect that party will probably not be very enjoyable and not worth attending, even if you had zero qualms with the invitation.
Having some sort of dress code? Fine, it’s reasonable to expect that there’s going to be some sort of threshold for what’s acceptable simply because it isn’t a football or drinking party. Setting one helps set a mood for the class of people, activities, refreshments, etc that will be present. And it can help some people avoid feeling uncomfortable by attending under or over-dressed. And, of course, specifying colors is not only exceedingly tacky, but forces people to potentially have to choose between buying an outfit they’d otherwise not wear versus attending. I, for one, do not like to wear red, or more white than a shirt. Besides, it IS a Christmas party, so I imagine most people will intuitively wear Christmas-y colors.
Besides, IME, the occassion often makes the dress fairly intuitive. When I was planning with my then-fiancee earlier this year for our engagement party, she wanted to include a line stating that it was casual in the traditional sense (ie, just a collared shirt is probably under-dressing, but a suit is over-dressing), and it took me a while to explain that casual would probably be interpretted as wear whatever you want. Ultimately, the fact that it was an engagement party where we were serving wine and champaigne would inherently imply to dress fairly nicely. IIRC, most of the guests wore a shirt and tie (or the female equivalent), and all but one of the rest wore at least a very nice collared shirt; the one who didn’t was somewhat socially awkward, so I suppose that was to be expected.
Either way, people generally dressed appropriately, and the party was very successful. I would imagine it would translate well here, and were I to attend, I’d probably wear a nice collared shirt, no tie, and probably avoid black (but that also has the complicating factor that black is 90% of my wardrobe, so that may not stick for everyone). Although, if I were to attend a party that had a cover, I’d probably consider wearing a tie since that implies to me that it’s a bit more formal.
Having a cover charge? As was said, unless the money is for a specific cause, like charity, it makes people uncomfortable to feel like they have to pay their friends to hang out with them. If you can’t afford to cover everything, that’s fine, have people contribute, I’m sure they’ll understand. I think potlucks are wonderful because, even if I end up contributing more money, I get to contribute something personal to the party and, of course, they make great ice-breakers: “Wow, YOU made the caserole? You have to give me the recipe…” Even for something like alcohol, which I could never really feel comfortable charging for, if you make it BYOB, at least people can make sure there’s a drink there that they like, and not be stuck with a bunch of alcohol they don’t want to drink.
Either way, especially considering that holiday parties tend to be only slightly formal and it’s more important to be homelike and comfortable, I think the option of doing a potluck is vastly preferable to asking for money. Yes, a potluck makes it less “formal” and if that’s their goal and they can’t afford it, I’m sorry but… TOUGH. If it’s important to them, they should budget for it next year.
It may or may not be overtly rude, but at the very least, they’ve done a very poor job considering the impression they’ll be making on their friends, and planning in general. I can’t imagine a party like that will go over very well and, if you do go, unless you LOVE the company (in which case, I can’t imagine they’d charge if you were THAT close to them), you will probably be finding yourself wanting to make up and excuse to leave within an hour of arriving. If I got that sort of invitation, I imagine I’d have more fun loafing in front of the TV, and so I’d decline to go.
If I were in your shoes, I would politely decline the invitation. I would not lie and say “we have other plans” either because, beside the fact that it’s a lie, it sends the mesage that I would have gone if I weren’t otherwise busy. If they then asked me why I couldn’t attend, I would be honest about it and tell them that I didn’t think I’d enjoy myself at the party and explain my reasoning as best as I could to avoid hurting their feelings. At the very least, it would benefit them to understand why people aren’t attending and/or why the party will likely flop, so they can do a better job next time they want to host a party.
It looks like a rather tough situation for you and, depending on how close friends you are with these people, could end up making things rough. Regardless of whether you attend or not, I hope you have an enjoyable time that evening.