Now I’ve discussed your party options for Tel Aviv itself this NYE (2012), I can tell you that if you’re looking for a psychedelic, reggae, hippie, memories-of-india open air festival to beat all other free spirit events, you should sort yourself out and head down to the Desert Ashram down south in the Negev, for a 3 day festival / party taking place from the 29-31st. If you hurry, you can still get a ticket for 160NIS. Price goes up tomorrow to 190NIS and again on the 29th to 210. Still a pretty good deal for what you get.
Check out their website for more info about what’s on. I’ve not been but I gather the vibe is great. There’s some non-tented accommodation but I assume it’s all gone now, so you’ll need to beg, borrow or steal yourself some camping gear if you want to go. There’ll be food and drinks sold on site, so you don’t need to bring cooking facilities. Contact ashram@desertashram.co.il with questions.
Buy tickets for it here.