We spent a week in Washington DC a couple of years ago, and it was one of our cheaper vacations. Mainly because after the hotel and food, there isn't really anything that costs you money. Most of the attractions are free. I think the only thing we paid extra for was the Spy Museum and the trolley tour. Although the trolley tour costs money, I HIGHLY recommend it. There is so much to see there, and using the trolley allowed us to see more and do more.
Basically you buy a one-day ticket and you can get off and on at as many attrtactions as you want. The thing about Washington is there is a TON of walking, and since we were there in the summer heat, it really saved us to be able to use the trolley.
We did not use our car once the entire week we were there. We parked it at the hotel and used the metro or walked exclusively. The metro is extremely convenient, and very easy to find your way around.
As far as hotels go, someone that used to post here that lives there gave me the name of a website for discount Washington DC hotels. We booked 3 different places and loved them all. We stayed at the Loews L'Enfant Plaza, the Radisson on P Street and the Marriott Courtyard Northwest on Pennsylvania Ave. All 3 were nice hotels. The reason for 3 different places was because each one was convenient to different attractions. At Loews L'Enfant Plaza it was walking distance to the Holocaust Museum, the Smithsonian and the Bureau of Engraving and Printing, for example. It was not so convenient for the zoo or Spy Museum.
I personally didn't find the foor outrageously expensive. In fact it was comparable to here in the Chicago area. And definitely much cheaper than WDW!
If you want more info, let me know!