You are definitely not alone in your views on the cost of the dining plan. Some people (like myself) like it, because I can have my meals paid for before I even get to Disney, and others do not. The good news is that you are not required to purchase the dining plan. The dining plan is sometimes a better fit for some families than others. That being said, there may come a point (for some it has happened already) where the cost of the dining plan makes it no longer a viable option for families.
We're one that it's happened already. It's just not worth it anymore. As an AP holder who makes several trips a year down there solo, plus at least one or two with family, the TiW card's 20% discount just works out better for me. I agree one of the main draws for the DDP was having everything prepaid, but now I just look at the menus, figure about what I'll eat, (adding in taxes and tips), then add a little more to it and then just get Disney gift cards prior to my trip to cover my meals. It lets me eat exactly what I want, I still get 20% off most meals (since I usually do an early TS lunch and then a later TS dinner), and everything is completely prepaid, including tips. I don't scrimp in any way when I'm on vacation, but love knowing I can get two appetizers if I want, all three courses, or skip dessert if I'm not in the mood for it, plus get 20% off any alcohol and still usually come out cheaper than if I had used the DDP (especially if you add the tips and any extras I might buy back into the DDP price). I always come back with some money left on the gift cards for the next trip, which is also nice. Plus you don't have to worry about breaking even if you actually don't want the most expensive option on the menu.
I was always a big proponent of the DDP, but for me the breaking point came May 2011 and it wasn't because of price. We were eating at Via Napoli on the DDP. I really wanted one of their signature pizzas, but at just $18.00 it didn't seem as good a deal as the $27.00 seafood pasta dish, plus I wanted one of their appetizers, which we had to pay OOP for. I ordered the more expensive dish, but then drooled every time I saw one of those pizzas come out. Coming out of the restaurant, I realized that unconsciously I was trying to get the best value out of the DDP, even though I had always advised everyone else not to do that. I went back in Sept 2011 using the TiW card and got exactly what I wanted (appetizer, pizza, and dessert). I love Flying Fish, but my three favorite items are all on the appetizer menu. That Sept I went there twice and got all three of my favorite appetizers (tomato/mozzarella salad, mussels, and cheese plate). I would not have been able to do that if I had been on the DDP. I would have had to used two credits to get an entree and dessert I didn't even really want and then would have had to choose only one of my favorite appetizers and pay OOP for it.