I would say that this wholly depends on what you are looking for... The obvious choices for backpacker party central are the islands in the Gulf of Thailand (Ko Phangan and Ko Samui) and there are heaps of other nice places around that area. Another less known island is Ko Lanta, which sits below Phuket - this island is generally a lot quieter, though I would imagine that around New Years it could be just as fun but much less crowded than the main islands.
If you are after something more upmarket but decidedly more touristy (and likely more expensive), the Pa Tong region of Phuket is also worth a look. almost 7 years ago