The actual tea as such is a minor part, and doesn't require as much attention as if you're serving someone familiar with Chinese tea. While the event of afternoon tea is something of an institution with which most people will have some familiarity, the actual leaf you use is a secondary concern. Remember that you're trying to appeal to a broad range of tastes, so don't pick something too far from the mainstream (such as lapsang souchong, Earl Grey, etc.). Darjeeling is a classic for afternoon tea; or pick a robust, unchallenging blend.
Far more important is the attention that you pay to where you serve tea, how you serve tea, and in what you serve tea. If you're billing it as "afternoon tea", use your best china: a delicate, appealing pot, pleasant cups, matching saucers, and matching plates if you can. At the very least, don't use mugs / saucerless cups, or anything stained or chipped, if you can avoid it. It's time to break out your "Sunday best". There's no right answer, but the more effort you put in, the more honour you're paying your guests, and the more touched they'll be.
Standard issue afternoon tea usually comes with some home-made (by you!) scones, halved, and placed on a central plate. A small selection of jams (not marmalade) in small pots (with small serving spoons). A few curls of butter (not margarine or sunflower spread) placed in another dish. Most people would rather have a crumbling, poorly-constructed scone made by you than something androgynous bought from a shop. It doesn't matter if you got it wrong, but at least you tried. Never, ever serve "store food" (i.e., bought pre-made from a store) at afternoon tea - it's a great way to get people to question your taste. Officially, store food is for convenient only, and something one eats when one must. Definitely not at afternoon tea. I have known people to never return to a hotel based solely on the fact that the cakes were obviously store-bought.
Crustless small sandwiches (quarter-slice triangles) and small cream cakes are always good. We don't usually take muffins and those sorts of small baked goods for afternoon tea, but a Victoria Sponge or similar can be a classic. Delicate biscuits *perhaps*, but they're getting close to being categorised as "store food" unless they're particularly fine. Of course, home-made biscuits are great (but never cookies, which are anathema to afternoon tea).
Offer a single jug of good milk (of any variety as long as it's not
100% skimmed - semi-skimmed is least controversial these days), and have a bowl of brown and white rugged-cut sugar lumps (ideally with serving tongs). One little plate per place, butterknife, teaspoon, cup-and-saucer, napkin.
Pick a pleasant place for tea, with some pleasant unintrusive music (fresh and gentle). Clear and clean the table, pick a decent tablecloth. Unless you're going for a rustic farmhouse-style event, don't pick the kitchen table (and only go for a rustic farmhouse-style event if you have access to something approximating a rustic farmhouse). Fresh flowers in a small, understated arrangement are just fine.
The poster above said it best: accomodate, don't capitulate. You're the host, and what you pick is, by default, what they will have. They have no choice, you're the boss, and you shouldn't pander to their every anticipated whim. Believe in yourself and have the confidence to understand that they are obliged to enjoy what you serve, as long as it's carefully done with no obvious tat (shop cakes, rough mugs, unpleasant teapot, poor setting).
Like Basho said, "learn the rules, then forget them". Afternoon tea is all about bringing a little gentility back to the busy world, so take it slowly. Prove to your guests that the art of conversation isn't dead, yet. :)
Everyone loves afternoon tea. Whether for gossip or for that particularly type of profundity that usually only arises from the nether regions of a pub, the fact that it is still with us is one of the more encouraging aspects of modern life.
Toodlepip,
Hobbes