I guess it depends on your idea of "cheap". The first time I went there, $100 a night for a hotel was expensive for me (since I was there for 2 months). A youth hostel then was typically between ¥1500 and ¥2500 per night, without meals, and I only got ¥68 to the dollar then (so around $25-$35 per night). Food was mainly noodle bars, bread shops, and occasional sushi packs from a supermarket, or eating at the youth hostels. Any more than about ¥500-¥700 a meal was too much. The occasional ¥1000-¥1200 meal was splashing out.
This next time I'm paying $150+ a night for one or two of the hotels, since I'm not on the same budget as that first time. And spending a few thousand yen for a meal is also not a problem. The last time I was there with my wife though, I did balk at paying ¥20,000+ for beef! (for sukiyaki).
And I agree that things like admission charges and local bus/tram/subway fares are fairly cheap. Long distance trains, especially the shinkansen, are pretty expensive - but then they probably are here too (I've never taken one in Australia).
A rail pass is extremely good value if you plan to travel a lot, and with their good rail system you can base yourself in just one or two places and day trip to many other places. You can get air passes which are good value too, especially over longer distances (they're a fixed price irrespective of distance). We're using both on this next trip.
we went everywhere but the only people we spoke to were americans that we met at a guesthouse we stayed at
That is one of the advantages of staying at youth hostels. Many of the people I met and talked to were staying in the youth hostels, but not all. It's probably also easier when you're solo, as I think you're less inclined to be bothered when you're with your partner.
If you don't mind dorm accommodation, many of the youth hostels are better quality than the low-end ryokans and minshuku. They often have good food too. The main annoyance though is the 9pm curfew. My wife put a couple of the places we stayed at last time in the cheap and nasty category (I thought they were fine though), so that's why we're mostly staying at business hotels this time.
Japanese are very quiet ppl and keep to themselves...probably also because they can't speak english.
This is more noticeable on the mainland. I found them far more open and friendly on the islands (Okinawa and south). Still, I only encountered a few outright aggressive Japanese people, one I remember being a youth hostel warden, and another a shopkeeper where I obviously did the wrong thing by attempting to self-serve a steamed bun
(they were in a warmer out on the footpath with tongs and paper bags sitting on top, so I made the logical assumption it was self-serve then go in and pay - wrong!).
We also paid a premum to stay in a Ryokan but the traditional japanese rooms on tatami mats felt eerie
I like them, but the rooms can be pretty small. The way I look at it though, is how much time do you actually intend to spend in your hotel room?
That first time I even spent a couple of nights in the alps in a cheap (quality - not price) rented tent, and froze the whole night both nights (the days were sunny and warm, but it got below freezing overnight and I didn't have a sleeping bag). But then I'm into the outdoors and camping, so I don't mind this sort of thing (except the freezing part), and I couldn't have afforded to stay there if I'd had to pay for normal accommodation.
My first time in Takayama I stayed in the youth hostel in the Buddhist temple, and last time when my wife and I were at the Matsuri (Spring) festival, we stayed in a small ryokan which wasn't bad.
The main thing I hate about Japan is the prevalence of smoking. They still smoke in restaurants and accommodation, unless you get into a bigger place with segregated non-smoking sections. And Murphy's law says that the moment your meal is served in a restaurant, someone will sit at the very next table (even if they're the only other customers in the whole restaurant) and smoke like a chimney. Ruins the meal every time.
Cheers,
GP