How does your DH feel about it?
Like Ali I'd go as a one off too.
We don't have enough family (who will be civil to one another) to put together a party and I think sometimes family (extended) can be taken for granted rather than treated as the precious gift they are - not that I think you are taking your family for granted, only that sometimes we can all get a bit too focused on baby's sleep when other aspects of baby's life are also of great great value, maintaining contact, family tradition and good relations with family is going to be such a wonderful thing for your little baby even though he is maybe too young to really enjoy them right now. If it is important to your DH and to his family I would really consider going. I would look for ways to make it go as smoothly as possible, leave early if he won't settle, dress him in his night things and use a fleecy onesie instead of a gro bag (if you usually use a gro bag) so he can stay in warm clothing which safely works with a car seat harness to reduce the amount of fiddling around with clothing etc, pre-warm the car before transferring him so he doesn't get suddenly cold, take white noise if you think it would help drown out the noise of the party, those sort of things.
That said, if your DH isn't really bothered by skipping the party one year and if the rest of the family are very understanding about it then perhaps this is the year to skip? problem with skipping once is it makes it so much easier to do again, a 1yo isn't so good at sleeping elsewhere either, or a 2 yo, mine will be almost 3yo this Christmas and I doubt he'd settle to sleep elsewhere...and you could end up dropping out of the Christmas party tradition
I suppose I'm suggesting looking at the bigger picture, at all the relationships involved, possibly consequences if you do/don't go and making a decision you feel confident about.
