Make sure they all know it is a surprise. Emphasize that again and again. Choose two or three people you really trust not to spoil it who love your wife and try to get them to help. Or get a party planner.
1. Location. You want somewhere gorgeous, but inexpensive usually. Think about really nice public spaces: the library, a museum, a park, whatever. You might even find somewhere new and gorgeous where you live. In this case, living in a small town will be helpful in that you can rent out places for cheaper, while a large town means you have more places to choose from. If there is somewhere super obscure, but awesome ask them about renting at night.
2. Catering. If you have ANY friends that know ANYTHING about this, get in touch with them and follow their advice.
3. Invitations. Send a save the date invitation—just something quick and cheap, even an email saying the day of the party and the time. That way you can wait until just before the birthday to let people know what KIND of party it is. Everyone has some formal something somewhere, most likely, so that shouldn’t be a huge issue and there is less chance the surprise is ruined. Because there’s a huge difference between “your party is next friday” and “omg! Hubby is planning a Masque!”
4. Costumes. In the invitation say it is a masquerade. You might want to include something like costume formal or whatever. Basically imply they should either come in formal/semi-formal attire or an equally formal costume. You don’t really want a Rubix cube to show up protesting that he’s in costume.
5. Masks. Have extras at the door. Buy a bunch of the super cheap plastic ones. Insist people wear them.