We vacation and it is something we put a big priority on so we save pretty aggressively for this. We do a big int'l trip every other year (this will go to every year hopefully once I get 3 weeks' vacation per year), and a few long weekends every so often as well as trips within the US as well.
We are very lucky to live in an area that has plenty of beaches and mountains in driving distance and we are close to a major airport as well. We take full advantage of these facts.
So for example two months ago some friends and I rented a cabin on the Hood Canal for the weekend. It was in the off-season so we got a great rate on the rental, and it was only a 3 hour drive there and back so it was definitely manageable. The cabin had a full kitchen, so for $300 for the rental, about $40 for gas and $70 for food (we splurged a bit on that!), four of us had two nights and three days on the beach. We found the cabin on
www.vrbo.com which is a great website for cabins!!
Our bigger vacations tend to be expensive in terms of airfare, but inexpensive once we get where we're going - for example last year we went to Bali, and spent $1800 on airfare for two but only $800 total on lodging, food, transport, etc for the two weeks we were there including a splurge private snorkelling excursion ($60) and an $80 meal at an exclusive resort.
In terms of cost, we are generally flexible - we pick locations based on where we can get good deals on airfare and lodging. We try to stay in self-catering places in the US to help cut down on our expenses, and we do go camping or stay with friends/family for other trips. Whenever reasonable, we rely on public transport rather than hiring a car too.
We're actually headed to the SE - Birmingham, Alabama; New Orleans and possibly Tallahassee/beaches area in Florida - in June and we're finding it relatively expensive (in our opinion!) so I do feel your pain.