I haven't read most of the responses but here's mine...
I have two daughters - 19 and 21 - and I would never have said yes in the situation you describe. I trusted my daughters but kids want to do many things that are inappropriate for their ages and it's your job as a parent to know when to say no. I would have let them attend but expected them to come home and I would have offered to let them bring any of the other girls who couldn't stay for their own party.
I am pretty sure that if I called my daughters right now and asked them what they think you should say in this situation, they would tell you to say no. And they would have been furious to be told no when they were 17, but a bit more maturity has changed their perspective. These are girls with steady boyfriends and I have no illusions about their activities at college, just so you know that they are pretty typical.
You have to decide what's important to you and what you are willing to battle over. Sometimes being a parent isn't easy and you certainly have times you aren't popular.