The Wall Street Journal today talks about the pitfalls of holiday parties and saying the right thing (it requires a subscription, so I won't link to it here), but their advice is to keep it easy on the alcohol, don't stick your foot in your mouth, and especially don't get carried away and start groping that girl from accounting or you might find yourself unemployed by New Year's.
I would add that there are certain items you don't talk to the boss about - religion and politics. Even if he has a picture of the President in his office (mine does), you never know what land mines you might step on, so it is best to leave politics at the door, even if you think you might agree with him. Ditto on religion.
So that means learning the art of small talk, or talking about things without really talking about anything. Safe topics always include sports (golf in this case), recently released movies, vacations you have been on. Kids are usually safe, unless someone happens to have one in jail (this actually happened to me about a decade ago. I asked a manager about his kids, and one was in prison), so stick to YOUR kids and see what else is volunteered. Inevitably the topic usually turns to work since that is usually about the only thing everyone in the room has in common, which it did last night.
I had to keep Mrs. Director from checking her watch every ten minutes, but we made it through the evening keeping up three hours of small talk. In all I think the people who WEREN'T invited to the party got the better deal.