I grew up on Merritt Island (Kennedy Space Center is on Merritt Island) and I recall standing on the roof of my parents house watching John Young and Bob Crippen go up in Columbia on her maiden voyage. We had heard for months about all the problems and issues with shuttle. I recall that many of my friends and their parents (most of whom worked out at the Cape) were concerned about a catastrophe. Honestly, we were pleasently surprised when STS-1 survived the launch...but I think many of us in the area knew that it was a matter of time.
When Challenger exploded, my mom called me. Her first words were, "well, it finally happened." Sadly, it was not a surprise.
BTW, Frogm4n...where did you go to school?