There are more habits that I'm glad I learned than those I'd rather forget, thankfully. Most of the frugalities I'd rather leave behind are a product of my broke college/apartment days, not my childhood - powdered milk, ramen noodles, hot dogs, eggs. I have a serious aversion to a lot of cheap foods. But some I do still enjoy, like red beans & rice or baked potato with salsa.
The one thing from my childhood that I would never do with my kids is travel-related - growing up nearly all of our vacations were to visit family, and we stayed with whomever we were visiting. I do take the kids to visit distant family, but that isn't our ONLY travel and we get a hotel room rather than squeezing in with aunts/cousins/whatever. I did enjoy it at the time. My mom's only sister lives in VA Beach, and there are a lot worse places to be stuck going back to every summer. But I want my kids to see more of the world than that, and I want more privacy and freedom of schedule than you get when you stay in someone else's home.
Most of the things my family did to pinch pennies weren't bad at all, though.
My grandmother grew a huge kitchen garden and canned a lot of produce for the winter. My mom never really did the same, but I suppose she really didn't need to, with my grandmother growing and putting up enough for the whole family and half the neighborhood. I've continued that in a big way; I have large gardens that expand a little more every year and am working towards a goal of growing 90% of the produce my family eats (the remaining 10% being things like bananas and citrus that I can't grow here).
They both watered down juice & Kool-aid, and we never even knew it until we started school and had the "full strength" version because Grandma was our daycare. During the summer, it was homemade popsicles made from the same and semi-frozen berries from Grandma's garden.
My mom & grandmother made a lot of my clothes, but it was never a matter of embarassment. My grandmother was such a skilled woman and my mom learned from her that they made clothes that looked as good or better than store-bought, and with the exception of the brand-conscious pre-teen/teen years, I loved that they could do it. So far, my DD seems to be the same way. She was so proud of her Disney customs from our Christmas that she is wearing them all to school to show off this week.
My grandmother had a lot of odd ways of saving money that I assume were because of the era in which she grew up - she saved everything, tin foil, plastic bags, twist ties, you name it. She used a ringer washer until she wasn't physically capable of it any more (sometime in the late 80s she finally bought a washing machine) and line dried the laundry even longer. She'd buy non-perishables on sale in HUGE quantities; it has been almost 20 years since she stopped doing her own shopping, and my kids are still taking pencils and erasers from her stash to school every fall! I giggle every time I see a price tag left on something, because it is usually from Woolworths or Kresges or Chathams or Perrys, all of which have been out of business for many years, and usually has some ridiculous figure on it, like the ten-cent roll of wrapping paper my mom brought to use for Christmas presents this year. I'm not that dedicated - I don't have the space or the clutter-tolerance to really horde good deals - but I do buy on sale and build up a little stash of things so that I'm never running out and paying retail in a pinch.
We couldn't afford steak and she knew we never would eat liver ... To this day I don't mind liver .... but I now LOVE steak!!
) but they were awesome. They were a product of the Depression so they knew the value of a dollar but luckily for me they had lot's of 'em by the time I came around. Now my birth mother may have "horror" stories of growing up "with out" but I sure don't. They were careful with money but we had a beautiful, large home in Miami. I had private school, dance classes, and when I told my daddy I wanted a horse he got me one. Vacations every year (to their other home in N.Y. then to 2 weeks to the condo right on Myrtle Beach). We ate out when ever we wanted but "Gamer" was also an awesome cook! No one had to leave at 18, but you did either have to go to school or get a job after H.S.. They paid for my wedding, honeymoon and helped us get our first place. They are the BEST parents a kid could have ever asked for, even if they weren't my birth parents. 
We always got our favorite meal on our bdays, sometimes we had the money to go out sometimes we didn't, that was determined beforehand and we picked what we wanted. Mom almost always made our cakes for us but ice cream was usually store bought. We did have an ice cream maker but it took AGES to make ice cream so we splurged on bdays. 
So, when I started babysitting, it was awesome!! We give DS10 an allowance in hopes that he can learn to manage money better than we did. 
She did what she could and we never went hungry.
