Let me tell you a little story. We (my roommates and I) had two huge parties in college:
Party #1 - we had the music very, very loud. Loud enough that you couldn't comfortably have a conversation. Party was a huge success, everyone got absolutely smashed, people were dancing and rubbing all over each other, it was a great time.
Party #2 - some jackass from upstairs insisted on making a scene about the noise. We offered him $40 to go away for the evening, and he wouldn't take it. We had to keep the volume level at a point where you could still have a conversation if you tried. Party was still a success, but instead of being an all out dancing/drinking adventure, we ended up with little pockets of people just hanging out and talking - ended up being more of a "night at your local pub" kind of event. Still a great time, but an entirely different sort of thing.
We discovered that loud music and cramming lots of people into a small space was the key to a good "dance" party. Oh, and the booze, obviously.