Certainly yes. Schools should have holiday parties. I totally agree with DarkMuse13...religion doesn't matter when it comes to celebrating.
I remember celebrating Christmas in school (that was thirty five years ago!) before the Christmas holidays began, singing hymns and lighting candles. I belong to another religion but it didn't matter at all.
It was fun time all the way celebrating Christmas in school with friends. In fact, we used to look forward to those times every year.
Holiday parties in school give the students and the staff a feeling of oneness and belonging.