My husband and I did this a few years ago, and totally lucked into being ON times square right before the ball dropped. We ducked into Bistro 43 (I think) the day prior to New Years. We found out that the street was shut down for emergency vehicles, and only attendees of the private parties in restaurants on the street would be allowed in. We purchased tickets for $100/each, which included dinner (not drinks).
On NYE, we strolled up to the street corner at 7:30 p.m., and we allowed in with our guest passes. We ate and drank the night away. Around 11:30 p.m., we walked up to the barricade on Times Square, and a very nice police officer escorted us to the VERY middle of Times Square (which is kept empty for safety purposes). We were so close, we could not actually see the ball, but we certainly had a great time and were in the middle of the craziness without being huddled in the masses for hours.
I highly recommend you try to find out which street is closed for emergency vehicles right off Times Square, and then phone all the restaurants on that street. Worked for us!