I'm not happy about the increases and I'm not too interested in pricing out a vacation at the new rates yet, I don't want to know. But that said, I still think Disney provides good value. For us, saving on car rental makes up the difference in hotel rates. I still think you can create a vacation that suits the needs of your family and budget. I tell people, you can stay off property cheaper but factor in the car, the travel time(min. 1.5 hours daily) and "traffic" to and from (a nightmare on our last trip

) and I don't think it's worth it. If traveling with a little one, a box of cereal, loaf of bread and PB&J in the room can make all the differance. Meals can be pricey but servings are large and can easily be shared for little ones.
As to expenses for WDW, my DH works in industry and is quick to point out prices have all skyrocketed - steel, rubber, fuel, copper, feed grain, etc., and it all effects WDW. Ethonol is a great idea and hopefully a solution for the future but right now it's driving the price of grain close to that of fuel, and we still have to eat.
No easy answers but at least right now, I know we'll be back.