Okay, I ran a grand ball in my campaign (Ice, Luck and Honour) about a year ago. I'm sure that my players will agree it was one of the most satisfying sessions we have had in a long time. Not a single dice of combat rolled, and everyone felt exhilirated.
The key to its success was that the dastardly villain that the PC's had been chasing for near to two months was there (It was all staged around the Shieldmeet Tourney), and he was joining in on the celebrations. The characters were under strict orders not to disturb the peace, but they caused the villain so much social grief they felt like they had knocked him dead. Fantastic to DM, I assure you.
Points of interest included:
The mage using prestigidation to trip the arch-villain over his own cloak.
The introduction of a major new villain by showing him take advantage of an innocent Lord's daughter (the cleric of Tyr almost went insane over this, but knew he couldn't do anything physical so had to try to roleplay through it)
A dance that ended with a character falling for a betrothed princess (this has had the most immense ripples on the gameworld)
The arch-villain drunkedly sitting with the characters and laughing about all the people he has killed whilst the characters swear there and then they will hunt him down and kill him when all this is over.
A lord goes missing half way through the ball (found later by [plot point deleted for prosperity of my story hour])
The halfling rogue gets to entertain a half dozen kids with stories of their clash with a mighty dragon etc etc - all roleplayed of course.
And a load of others.
I have to say, some of the ideas being thrown around by the posters in this thread are fantastic and even if you pick out 10%, they will make a memorable ball scene.
My big tip is to shove a villain into talking proximity (but make sure as hell you have an escape plan, lest things go awry), it really helps to build the hate relations between enemies and PC's.
Anyway, I've talked too long.
Spider.