Elena,
Badpants is right in that you won't get a lot of extra people in the community in the door to bid. That doesn't mean that it's a waste of time to do an auction, though. It sounds as though the auction held before you arrived had the right idea for starting up - combine with another event. That way you have people who are already attending and you don't have to convince them to come to a special auction event that typically has costs for food, drink, entertainment, venue, and advertising.
Then it's time to pick the right items to auction. For our auction, we have a good number of things that people are going to buy anyway - we get donations from local car dealerships for oil changes or tire rotation, we talk to salons about haircuts, we ask restaurants for gift cards, we contact exterminators, we talk to dentists about new patient exams, birthday party packages from local bowling alleys, etc. You get the idea. About half of our items are things that people need and are in their budget anyway, so they don't mind bidding on those items. The other half are "luxury" items. We have 2 auctions, a smaller one in late October (where people can purchase Christmas gifts) and one in late April (where people purchase things that they think they will want over the summer).
I try not to ask families to buy items to donate. We often don't get the value back and that makes everyone upset. Besides, if the budget is tight, then every dollar spent on donating an item is a dollar that can't be spent on bidding. Many national companies are willing to donate - see the Ultimate Donation List thread - and often local companies are happy to donate too. Send someone who frequents the business with a letter about the purpose of the auction and you'll be surprised how many businesses are willing to offer something.
Then spend as little as possible to round out your items into logical groupings and also make sure that you have items that will go for low prices. It's okay to have a $10 gift card as its own item, knowing that it will go for about $8, because the family that buys it may not be purchasing anything else. One year we tried to group items so that everything was a minimum value of $50 and that turned out not to be a good strategy, so we've gone back to having some small ticket items too. If you don't have an audience that can pay $1000 for a vacation package, don't put one together. At our auction, each class puts together an art project and these sell well most years (for limited funds). You just need two parents who both want the project to get a good amount.
Once the auction is a settled part of the fundraising effort, you can branch off and have a specific auction event in future years. For this year, I'd also scale back my fundraising goal (to closer to $10,000), but work hard to get every dollar possible.
Hope this helps!
Laura