Space Tourism is based on the idea that people want to make trips into space. Not people with the so-called 'right stuff', but ordinary people, probably slightly better off than average, but otherwise ordinary people.
People like zero-g. They like to float around; it's relaxing, unusual and fun. They like orbit even more, they can look down at the earth as it slides past. They can look up at the stars. They like the fact that they have an experience shared by few others.
Questionaires seem to confirm this view- a majority of people asked on the subject claim that they would actually pay significant amounts of money to make a journey into space; and people have offered to pay very large sums to go there; and Dennis Tito actually did it.
There is a wideranging, comprehensive survey that has been released at http://www.futron.com/spacetourism.
The current state:
Dennis Tito and Mark Shuttleworth are the only two space tourists to have gone so far. The exact terms have not been revealed, but are believed to be about $15 million. SpaceShipOne has not launched any tourists as yet- all the pilots have been paid to be there. This is likely to change soon.
Let's examine why Russia is currently launching the tourists; rather than America. In Russia, their admittedly less capable rockets cost a tiny, tiny fraction of the NASA models- the $15 million would have paid for their flight to the ISS and back again as well as contributing to costs of flying the other 2 astronauts on each trip. The rocket itself is believed to have cost just $5 million (according to Gary Hudson of Rotary Rocket fame).
The low Russian costs relate to the low pay of engineers in that country; but also to some clever design and manufacturing decisions, for example their rockets use robotics in their construction, and their rockets are assembled horizontally. NASA has never been under much pressure to reduce the cost of launch vehicles; indeed pork barrel politics tends to push up the cost. NASA clearly needs to work harder on their cost structures, but if they did that, they would employ less people, and less votes would acrue to the politicans that fund NASA.
Interestingly Boeing is currently engaged in a joint venture called Sea Launch, using the cheap russian vehicle and Norwegian sea technology and Boeings other sales and technology. American space tourism proponents are fighting this trend, by trying to create non-governmental and presumably more efficient startups- most of which are doomed to fail, but some are likely to make it in the long-run.
The potential of space:
The cost of launching may eventually go as low as $200/lb; see Costs of Launching to Orbit. If it can reach these low levels with reliability then launch costs could be below $10 thousand; people would be able to spend long cruises in space in zero-g; watching the earth glide by.
Trips you might make
The likely tourism trips for the foreseeable future include:
short suborbital flights (a few minutes)
orbital stays (a week or more)
lunar (dark side of the moon) flyby
mars trips (18 months minimum)
The latest news is about SpaceShipOne, and how it can briefly enter space, giving more than three minutes of zero-g (6 times longer than parabolic flight). If things go to plan, based on this technology, Richard Branson's and Virgin Galactic are intending to offer routine flights into space for $200,000 within a few years time.
Beyond that, there are exotic designs for flying straight into orbit- Skylon for example; Space Elevators are looking more and more plausible (however Space Elevators for tourism have big safety issues due to the Van Allen belts, most tourism is likely to be in Low Earth Orbit for the foreseeable future), and there are plenty of conventional designs for rockets to go into orbit.