You may deduct only 50% of expenses for entertaining clients or customers for business purposes, no matter how many martinis or Perriers you swigged. (Yes, this is a change. In the old days you could write off 100% of every entertainment expense, and, until a few years ago, 80%.) Qualified business entertainment includes taking a client to a ball game, a concert, or dinner at a fancy restaurant, or just inviting a few of your customers over for a Sunday barbecue at your home.
Keep in mind that if you are audited, you must be able to show some proof that the entertainment expense was either directly related to, or associated with, business. So, keep a guest list and note the business (or potential) relationship of each person entertained.
Parties, picnics, and other social events that you put on for your employees and their families are an exception to the 50% rule -- such events are 100% deductible, and you need not prove it was directly related to a business goal.
To learn more about business deductions, for entertainment or other expenses, see Deduct It! Lower Your Small Business Taxes, by Stephen Fishman (Nolo).