Good dance party songs include "Bad Romance" by Lady Gaga, "Get Lucky" by Daft Punk, "Bang Bang" by Jesse J, Ariana Grande and Nicki Minaj and "I Gotta Feeling" by The Black Eyed Peas. Some classic dance party tunes include "Build Me Up Buttercup" by The Foundations and "Thriller" by Michael Jackson. For songs that invite the audience to participate, "Y.M.C.A" by the Village People and "Rock Lobster" by the B-52's are great choices.
When choosing songs for a dance party, keep in mind the venue and who the audience is. Know what they expect, and then choose the songs appropriately.
A dancing audience is going to be more responsive to songs with basic lyrics, throbbing beats and anthemic choruses that are easy to sing along to. Songs with lengthy lyrics and complex arrangements are off-putting to a dancing audience. Likewise, playing too many songs in the same tempo and key can alienate a dancing audience, so diversify your set list, and avoid playing three same tempo songs in the same key in a row.
At the venue, a good way to identify the general audience's taste in music is to observe their clothes, hairstyle and mannerisms. These give you an idea of what genres may work. Start safe by playing a few songs that you think the audience likes, and then build on this foundation as you get better acquainted.