okay the people whove told you to tell her are the ones you should listen to, BUT i know from a few times being in your situation (im in it at the moment actually) its probably the hardest thing youll ever do, and if your like me, wont get round to doing it.
if you do the above post (which i basically did twice) itll get to the point (probably the dance thingy) where she gets frustrated and takes you to one side and says 'look i really like you more than a friend, what do you think of me?' where you'll have to tell her what you think, which will ruin her night (or you'll just lay it off saying i dont know what i think, i sorta like someone else etc.......and have to speak to her later on).
what you HAVE to do is not lay it off and next time you see her and she does something like get close to you, just say 'look, i feel like you want more than a freindship, and i hate to let you down, but... (in your own words).
youll want to lay it off but you have to just do it, fight your fears, after youll feel pretty shitty but later on youll know you did what you should have. do it before the dance, and she may still have a fun night.
first time i said that to a girl it was someone i did stuff with (in a small group) probably every other day, and i knew shed liked me for over a year (made it harder). i handled it pretty badly, but in the end did the above, and were still mates and do stuff together pretty regularly.
come to think of it ive been on the recieving end as well and trust me, it is the best (and only) way.