I haven't been here for a while, but thought I'd chime in on this one.
First of all, while the space shuttle is far more expensive than originally planned, it is far more cost effective in terms of capability than any manned spacecraft in history.
Of course, when you look at the achievements, it starts to look a little pale next to Apollo...
Second of all, the space shuttle has, statistically, a fantastic operational safety record. There have been two major failures in 113 manned shuttle missions - there were two major failures in only 16 manned Apollo missions. Of course, only one of those was in space, and it did not result in any fatalities (Apollo 13).
But then, 14 people have died on the space shuttle. When it fails, it fails spectacularly, every time. Even so, when you average fatalities to a rate, the space shuttle comes out ahead - unless you restrict it to fatalities while under way, of course. And the Command module of the Apollo spacecraft underwent a number of changes from Apollo 1 to 13.
It's worth noting that part of what saved the Apollo 13 crew was the modular design of the spacecraft. Once you get lined up in your reentry corridor, it's damn hard to make that little command capsule blow up on the way down. However, the idea of using a similar contruction for a shuttle replacement is laughable, from both a payload and financial perspective.
VentureStar as a ship concept was excellent. The economic perspective was foolish; making NASA a commercial entity will not reduce costs.
My point with all this is to point out that, when you come right down to it, what really bothers me is that it simply isn't worth it right now. We lost seven brave astronauts, and for what? - Frickin' microgravity cancer-cell experiments!
I think there are two priorities. The first is to get a good, cheap, safe spaceplane into service for actually getting astronauts into space. The shuttles should be held onto for the time being, because that payload capacity can come in handy, but they are getting older.
The second priority is for the boys in Washington to grow some balls and give NASA the money it needs to get a REAL space program running again. I think it's time to go back to the moon, but more importantly, to head out to Mars. At least if we lose seven astronauts on a Mars mission, it'll mean something.
Sorry for the long post. My $0.02.