Hey now, don't be knockin' Pittsburgh!
Well, I've heard about something called "the Pittsburgh toilet" (toilets installed right in the middle of the basements of many Pittsburgh houses, no walls around them or anything)
It's not "right in the middle" of the basement. At least, not the two I've seen. They were against the wall, kind of tucked in the corner along with a shower and a sink. Like dawebb said, they were actually a practical idea since the basement/cellar portion of a house in hilly Pittsburgh will usually have its own entrance from the outside. So the millworkers/miners could come home, go inside and get cleaned up before going upstairs. They certainly weren't/aren't the only toilet in the house!
As to the party connotation, well, let's just say that the ones I've seen were both located in homes being occupied by college students.
