First, recognize that running this kind of event is something new and different. Historically, LUGs have been composed of geeks (the "technically mature" for the politically correct) getting together to talk about their latest accomplishments with Linux. Today, however, one of the key roles of a LUG is to cater to and educate the new Linux user. Some LUGs don't really know how to cater to novices, so they end up just having an install fest.
As you plan your Newbie Night, don't leave the content of the evening up to the new users. A question-and-answer session in and of itself is not an effective way of helping new users. Oftentimes, new users don't know enough to ask appropriate questions, let alone understand the answers. It is best to have at least a portion of the evening prepared.
Start off with a demonstration of one of the many things that make Linux unique. Show the newbies x2x, impress them with virtual desktops full of eye candy, boggle their minds with endless free applications that actually work well.
Switch window managers, creating a whole new look, and watch their jaws drop. Don't show them a Windows look-a-like; show them something different. Every part of Linux is themeable. A big part of what Linux is all about is freedom of choice. Show that and you will have a captive audience.
Once you've got their attention it's a good idea to walk through a quick install of Linux. One of the typical results of showing off what Linux can do is a room full of intimidated people. If you go through a quick install of Linux and they see how easy it is to get started, they'll be comfortable again and ready to learn.
At this point, you're ready to disperse your experienced members among the new users. Some will have brought their machines to get help with the installation; some will have brought their machines because they've broken something they cannot fix; and still others will have brought just questions. With all these users, the experienced members of the LUG should remember to share "best practice" advice.
Many times new users run into problems with something they're trying to do. More often than not, they're trying to do it the wrong way from the start. An experienced user usually has two choices: explain and fix the immediate problem, or take the time to show the new user the correct way to do what they're trying to do. The second option is the best way to make the Linux community more powerful. Allowing others to learn from your experience helps them get further along in less time, making them more knowledgeable both for themselves and for others in the community. So take the time to give them best practice advice and don't just make the quick fix.
If you prepare your LUG for a Newbie Night, you will likely end up with a larger, more knowledgeable LUG. You will help new users just coming into Linux along a path for learning rather than throwing up a roadblock in the form of a command line. Exhibit the impressive, demonstrate the simple, explain best practices, and you will have new users in your LUG who won't be newbies for long.