You've gotten so much good advice! I just wanted to add that life's too short to keep people in your life who cause you distress. I find it much more satisfying and fun to have a few really great friends (or even only one), then people who don't understand the true meaning of friendship. Quality over quantity for me!
I think the most graceful way out of this is to just be honest. You're dealing with a lot right now and if they think you're a party pooper that's their problem. You're a great person, Michele, and I think you're probably a really great friend too.