I'm not wild about the expense of the inauguration either and while it will probably cause a good return in the DC area, that doesn't mean much outside of that area.
The inauguration is more symbolic anyway and Obama has proved to be an impressive icon. See, no matter if Bush made good or bad decisions, his mistake (even more so with Chenney) was that he was disconnected with the public. He didn't communicate with us like Reagan did. (nor did he have the skill like Obama and Reagan). The average person knows shit about Washington, but they do watch tv and have an impression of the president.
Obama will do very well if he governs from the middle, he speaks well, does well in front of the camera, seems to be able to compromise, is a master politician, and most people feel connected to him so far. As long as there are good solid decisions made behind the scene, the president doesn't need to be the most capable individual. He needs to know how to use the strength of others around him, govern perception and lead.