I think you've pegged one critical reason, Wendy, and that is the expense.
Although as others have mentioned, it can often be cheaper to go abroad (especially during low seasons) than travel domestically.
Another reason I believe Americans don't travel abroad much is that they are intimidated by all the strangeness. It may be old hat to many here to land at CDG and find our way around Paris, but that ain't the case for most Americans.
My first trip to Paris was on business and I was scared to death. I bought books, I tried to get francs from a local bank, I studied maps. I think we tend to forget how scarey it can be going someplace REALLY FAR FAR away where most people don't speak English.
I think this is closer to why many people don't travel much, even outside their own state or province. Many people are creatures of habit--they like what they know and what they're comfortable with. Not everyone needs the excitement, adventure, stress, etc. of travelling to an unfamiliar place. However, I've always believed that in order to know your own country, you must experience other countries, as well. Just as in order to know and understand your own culture, you must experience other cultures. But then again, not everyone really cares about that kind of stuff.
After many years of travel experience I went on business to London with a young coworker. He was brave but uncomfortable on the trip. The first thing he wanted to do in London was eat at McDonald's. Fending off the strangeness was important to him. For dinner, our group went for pizza so he would feel comfortable and could still wear his jeans.
I also think the self contained resorts like Cancun are successful in part because they insulate the guests from having to deal with the strange country.
As James Michener said
If you reject the food, ignore the customs, fear the religion and avoid the people, you might better stay home.
But again, different people travel for different reasons. Those who go to places like Cancun (or resorts in the DR, Cuba, etc.) often just want to get away and relax. They're not interested in learning about another culture or food. And often, they just like being able to say, "I went to so-and-so" because it makes them sound somewhat important. Different strokes for different folks...