Do you have a portfolio? Put together some of your best design work to have handy to show around at the business gathering. Also, get previous customer testimonials and anyone you can use as a permanent reference - that way a potential customer can see your work, and chat with (or read a testimonial) by your previous clients.

If you were looking to go the cover letter route, make sure you tailor them to fit the business you are applying for -- explain how your skills can fit into their business. Heres some links for writing a cover letter http://resume.monster.ca/section1976.asp

I totally agree with the Business Card that CraftyLady mentioned -- this can be another way to show off your design abilities while providing all your contact information And the Flyer idea is a good idea as well -- maybe a Trifold handout that you could give to outline your abilities and skills in design? That could also include your contact information, customer testimonials, etc. as well as some images of your work