What episode is it where Katara and toph go to a party the pretty dress?

You're likely thinking of "The Painted Lady" from Avatar: The Last Airbender. This episode is from Season 2 and features Katara getting a new dress for a party thrown by the Princess of the Earth Kingdom.

While Toph doesn't actually attend the party with Katara, she does help Katara choose a dress and they have a fun shopping spree together!