Decorating your home to look like a circus big top is easier then you think. Use red and white streamers to give the illusion of a tent. Start all the streamers in the center of the ceiling, and have them come down around the entire room.
Drag out all the stuffed animals your children have been hoarding, and group them around the room. They can be centerpieces, or you can make "cages" out of boxes, and group them all together. If you have any stuffed monkeys, hang them on "trapezes" made from empty paper towel tubes.
To create a three ring circus, use hula hoops on the floor to make the rings. A small, round trashcan can be a stand for a stuffed lion or elephant.
Circus food is easy. All the food should be utensil free, just like at the real circus. Serve corn dogs, hot dogs, popcorn, unshelled peanuts, cotton candy and lemonade. You can make a poster that says "Concession Stand" to decorate the food table.
If you're feeling ambitious, many rental places have cotton candy machines, popcorn wagons and snow cone makers for rent.
The cake can be as simple or as elaborate as you would like. A plain sheet cake with balloons piped on, or a molded cake in the shape of a clown face would both work, be theme appropriate, and loved by the guests and birthday child alike.
If you're planning to serve ice cream, consider making clown cones. Put a scoop of bright colored sherbet on a plate, top with an upside down cone, to look like a clown hat. Use icing to make ruffles around the sherbet. Decorate the faces using candy. Red gumballs for the noses, M&M's for the eyes, and licorice strings for the smiles. You can assemble them ahead of time, and keep them in the freezer until it's time to serve them to your guests.