I understand that in 1983 the Air Force pointed towards meteorological balloons as the culprit. I don't think that's too far-fetched to believe. A weather balloon would be too high to be affected by flak guns and, during that time, I believe they were known to cause radar "ghosts" on the clouds below.
I'm kind of hunting for a source right now, and all I have is the Army's official statement about the event on Wikipedia. (http://en.wikipedia.org/wiki/Battle_of_Los_Angeles
@Nismar: I wouldn't be so sure something was caught in the spotlights. A light hitting a spot on a cloud could create the initial illusion. Once additional lights are drawn to the area (as in the famous photo), the contrast would likely be too high against the dark sky to be able to make out anything but a disc-shape.
I kid you not when I say an ex-girlfriend called me in a panic from Taco Bell saying there was a UFO above the clouds. It was a searchlight. I can only imagine that multiple in one area would conflate the problem.