*
Balloon animals:
A fun thing to do is blow up lots of long balloons beforehand and put them all in a big empty trash can.
Place the balloon can in a corner of the party area. This is where the kids can come to make balloon animals.
*
Clown Faces:
Staple together two paper plates - one on top of the other (the top parts facing each other). Cut out triangles beforehand for the clown's hat. Provide kids with markers, glitter, glue, construction paper, yarn or cotton balls for hair, red pompoms or little red balloons for noses, etc. so that they can decorate the plates to look like clown faces
*Musical Clown Noses: This game has the same concept as musical chairs. Place a pile of red sponge clown noses on a table or on the floor and have the kids walk around them in a fairly large circle while music is playing. Once the music is turned off the kids need to grab a nose and put it on (there needs to be one less clown nose than there are kids). Whoever is left with no clown nose to put on needs to leave the game. The game continues until there is one kid remaining (who is the winner).
*Gypsy: It's always fun to get a palm reading, tarot cards or crystal ball experience. You can have one of your friends dress up as a psychic or gypsy and give them their own booth. Then when kids come they can look into a crystal ball (or even just an 8 ball) while the Gypsy says funny things about them (make sure that they don't get too serious with their readings.. Keep it light and funny, like: "Oooohhhh, I can see that you are a carrot eater", etc.).
Knockdown
For this carnival game, put empty tin cans on a table in the form of a pyramid and let the kids throw beanbags or balls at them. If they knock down a certain amount, they get a prize. You can also have the kids use water guns to squirt water at the tin cans and knock them down.
Feed the Lion
On a big cardboard box paint the face of a lion with a hole for his mouth. Designate a throwing line and let the kids toss beanbags into the lion's mouth.
Elephant Ring Toss
Paint big ears and the shape of an elephant's face on a box. Then take an old vacuum hose and connect it to the box as the elephant's nose. Use thick metal wire to hold the hose up and let the kids try and throw rings onto the elephant's nose.
Some game ideas

I love the idea of a circus themed bday party... For music you could try and get circus music.. Maybe ebay..