This is a tough one. Creating the wedding guest list is going to be the hardest thing you do while planning your wedding. It's the least fun part, unless you have a bajillion dollars and you can invite everyone you've ever met. Very few people are in that category, so the rest of us have to painstakingly decide who should be invited and who should be left off.
Reduce Guest List, Reduce Overall Costs
Managing the wedding guest list is the single most important element to reducing costs at your wedding. I know that sounds harsh but once you get into the details you're going to realize that each person you invite is another "head" at the table and each "head" has a cost. The formula is pretty simple: reduce the guest list and reduce your overall costs. No one really wants to hear that, but it's true, especially if you're having a sit-down, full service dinner.
Consider a Destination Wedding
Let me start off by saying, the easiest way to manage your guest list is to have a destination wedding! Seriously. Think about it. Only the people who REALLY want to be at your wedding will shell out the extra expense to get there. Basically the guest list becomes self-selecting. [Caveat: this isn't really fair to do if you have a lot of friends or family who don't have much money.] I'm not talking about the Bahamas, although that'd be fun. What about Maine? If you live in New York, even getting married in Maine is a destination wedding.
Here's how it works: you plan a destination wedding. You invite everyone you want! Only 50% of those people RSVP, and only 75% of those people show up on the wedding day. So, go ahead and invite 200 people. One hundred of them might RSVP, and then a pleasing 75 will show up on wedding day. Easy peasy!
Ways to Manage the Wedding Guest List
If you can't have a destination wedding consider these options:
Immediate family (mothers, fathers, sisters, brothers and their spouses) - then have a low-key party with your friends later
Immediate family with kids (same as above but let them bring their children)
Immediate family + closest friends (for example, no work friends)
Single friends are asked to come alone (no dates) - I know this is controversial but it does manage the list
Friends can bring their significant others if they're living together, otherwise see bullet above - I told you this was harsh
No kids - often times the caterers don't have separate prices or even separate kids meals so you have to pay full price
Everyone except casual friends and office colleagues
My best advice so far: ask your wedding planner. They can provide excellent guidance on this aspect of your wedding. They will have ideas for you beyond what I've listed here on how to manage your guest list.