The reason I didn't say that I didn't want to do it again next year was because I knew that ex-friend looked forward to the event and that was her big Christmas thing. And I didn't want to take that away from her because I know how are holidays can be when you are on your own. SO I was willing to suck it up and deal with it. Until I found out that I was left out of all of her events. At which point I was wondering why I was willing to suck it up for someone who obviously wouldn't do the same for me. And now I am stuck with "so how do I get out of this with minimal hurt feelings and drama"
I think that you don't owe her much then, especially with the bolded. It is very nice of you to tell her that she will need to make other plans for next Christmas so that she has time to. Since it now sounds like this is definitely a former friend
(I didn't get that in my first reading), I'd say to send her an email or a text as soon as you can, just to get it out of the way. I wouldn't get into any specifics at all over it - just that the annual party on the 25th will not be happening.