1. Crossover dance party recommendation: Friction. It's a compilation of mostly UK Punjabi remix tracks, with a fair amount of Desi rapping (in English), and some heavy-duty hip hop sampling. I think it might be legalized material, since the label on the back says Sony, but I'm not sure how they can afford samples from Dr. Dre, Missy Elliot, Timbaland, Ed Lover, Groove Armada, and Beyonce... So this might be one of those CDs that's "legal in India"? Anyway, Bobby Friction, the BBC1 DJ, put it together. (I'm also looking forward to the Bobby Friction and Nihal joint compilation, which is supposed to be out sometime.)
This CD would be good for getting people out on a dance floor. Some of the tracks are catchy, and have monster beats -- that "whoa, where did you get this?" quality. It would work even if most of the people in the room aren't South Asian. You'll get most of what's going on even if you don't know Hindi or Punjabi; it's all about the beats and the hooks. You could probably get this only at an Indian grocery/music store; I'm not finding it online anywhere. It's ironic, because of the three CDs I'm talking about here, this one is the most influenced by American hip hop.
2. Traditional Bhangra recommendation: Mehsopuria, self-titled CD. Mehsopuria came out of nowhere last year, and stormed the UK Bhangra charts. He's doing traditional Bhangra, with the only nod to the Clubs being the heavy beats he uses on some tracks. On one track ("Dil Sada," our heart) he does use a 2-step beat; he never uses hip hop. For a guy born and raised in the UK, it's amazing that he resists the temptation to use English.
His name, apparently, comes from his family's village in Punjab, Mehsumpur. You should get this if you're looking for traditional Bhangra in the vein of Gurdas Mann. It also helps if you understand some Punjabi, and have a taste for this already. Not that the lyrics are all that original; most of it is classic Punjabi, "When you looked at me with those eyes, it made me lose my cool," material. But he has a good voice, lots of energy, and some nice melodies here. "Tumka", "Ranglay Punjab Diyaan", "Mahi" and "Punoo Haniya" are all really good. You can hear some audio samples (and watch music videos) at Mehsopuria's webpage.
3. Not quite a recommendation: Bally Sagoo, Bollywood Buzz, with vocals by Gunjan.
This one promised more in the vein of Bollywood Flashback, with hip-hoppy and R&B remakes of classic Hindi songs, and while it's a little thin (three out of ten tracks are mixes of the same song), it has at least two club-friendly tracks.
[Update: Cancel all that] The likely hit is the version of "Bindiya Chamkegi," which will not surprise people familiar with Bally Sagoo's earlier "Noorie" or "Chura Liya." But it does have the virtue of being a bit faster -- probably danceable.
Sagoo has for years relied on Gunjan's voice. She's good at getting that classic Hindi sound most of the time, but she doesn't quite carry the day on "Tune O Rangiley."
It seems that they've released basically the same album in the UK as Bindiya Chamkegi. (There are also some short samples from the songs at that link)