I am in the 'buy what you like' camp because people will judge you regardless of what you do so you might as well do what you like.
Having said that, I think Sliver and others have a point and the last thing you want is to spend the money and then regret it.
I like the cupcake idea but I would do it slightly differently...
Have your wife bring in the cupcakes (or whatever) and then explain that they are because you guys have saved for a very long time for this and you are really excited and are celebrating your hard work and reward.
If anyone were still jealous or bitter at that point, well there is probably little you could do about those people, no matter what you do.
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