Art Space in downtown Raleigh is fantastic even though it's not in Durham. The rates for renting it out are reasonable (a graduate student association was able to pay since most of your deposit is returned), it has more than enough space, and it's perpetually filled with art from local artists so it's already decorated. When I say local, I mean most of them literally work in the building. There is a large open room (also, with art on the walls) where people set up for dances. It's worth a shot even if it's a little far away.

Although, if you're having the dance ON Valentine's Day it might be difficult to get a reservation. Only, thought about that after I typed all of this out :P

From the site:

Non-Profit rates available upon request

Discounted rates are available evenings and daytime Sundays through Thursdays, and Fridays daytime hours.

Discounted rates are available for events less than two months away.