We also are a family of the spare change/one dollar bill jar. Even though we don't often carry cash (love those debit cards), we still save about $100 a month in this jar (always my luck that when I have a $10 bill, the total of whatever I buy will come to $5.01 - so $4.99 goes straight to the jar). I also round up at the grocery store (or anywhere I can get cash back), and put that money in the jar as well.
Once a month, I take the money and put it in my online account at ING Direct (they have GREAT interest rates). I do keep about $100 in cash from this jar at home at all times, and this money is used for "fun" things, like golfing, going to the movies, or anything else that is "fun." Vacation extras also come from this "fun" money.
To save money for vacations, I have a quirky system of putting any "free" money into my vacation saving account (also at ING). I consider "free" money any money that is not money I receive from earnings (ie bank interest, rummage sale money, tax refund, someone paying me back for something I loaned them money for - after all, I already went several days without that money - rebates, etc). My family and friends all think I am crazy, but when I go on my big trips, they back off on the teasing...well, at least for a little bit.
Good luck!