WDWIG.com has full restaurant menus with prices for darn near everything at WDW. They also have several restaurant and food reviews. It's worth logging on and checking out if you have concerns for costs. We used it's info for our party of 10 on our trip this past April, and were really happy with the results.
For starters, we too kind of winced at the food prices then came up with a decent strategy, mainly because we had four kids in the party and several of us hadn't ever been to WDW before (and some who had been before were there in the '70's when it was only MK).
We went with a "best overall bang for the buck" theory--meaning that if we're gonna shell out $$ to eat, then it either better be the best food for the best price going (which we gleaned from info off of this site as well as other Unnoficial web-sites and books) OR the eatery better have some built-in entertainment--like characters roaming the room or some kind of show going on.
We loved Chef Mickeys, Crystal Palace, The Princess Breakfast @ the castle, Marrakesh, and Mama Melrose's. We also wanted to to Teppanyaki or San Angel Inn but ran out of time and energy to get ourselves back to Epcot for a final big meal. Oh yeah, and while we were there we found out about Ohana's and definately want to do that place for dinner when we ever go back.
For character meals, I'd highly recommend the Crystal Palace for lunch--not exactly the most inexpensive meal going, but they put out a mile of food, enough to feed your family for the remainder of the day, particularly if you book a late lunch. My wife and Mom-in-law joked that they didn't eat at the same restaurant because they didn't eat the same foods at all--they had that many different food items to choose from! Kinda funny since both ladies filled their plates quite nicely. Character interaction with Pooh characters was fun. Restaurant is beautiful and relaxing--a nice break in a hectic MK day.
Word of warning: you didn't mention when your trip is planned. Crystal Palace is currently closed for rehab until Christmas season. Therefore my recommendation is moot if you're going to WDW before December.
We found that all character meals kind of run the same price-wise. They are cheapest for breakfast (but not cheap!), probably the best values for lunch, and gets to about $20-25 for adult dinners.
For cheaper fare walk-up style, we enjoyed food at the Back Lot Express in MGM studios, The Plaza Inn at MK, and the fish & chips stand in the UK pavilion at Epcot. But again, these weren't exactly cheap meals--about $4.50 for kids and $6.50 per adult.
Hope this info helps.