I would say Rome, because I love Rome, but it is fuckin' expensive there. Same with London, which is my favorite city, but....
A couple of possibilities:
Israel. It gets a bad rap in the press. It's a beautiful country, and it's extremely, extremely easy to simply avoid the places where it gets a bit risky. Jerusalem is a great city, with amazing art and historical buildings and stuff; Tel Aviv's nice-- good beaches. Haifa is great. Eilat is a fun little resort town. The fish in Tiberias is great, and so's the shawarma. The Dead Sea is an amazing little trip, and you can go wine-tasting in the Galilee. And it's really pretty reasonable, the whole way around.
Andalusia/Catalonia (Spain). I hear the prices have gotten a little more in control there. Toledo's beautiful, and so's Seville, and Barcelona. Good art, great historical buildings. Great wine.
Tour North Africa a little. Morocco, Tunisia, Algeria. See Gibralter. You gotta be a little careful in North Africa-- some places are sketchy-- but it's lovely there, and the food's amazing. And you can totally do it for cheap.
Argentina. BA is a terrific city: great couture and shopping, excellent night life. Great wine in Argentina, and amazing food. The glaciers in Patagonia are incredible, and well worth the trip.
Cruise Alaska. My wife and I just did this. It kicked ass. It was really a lot less than I thought it would be (though still not really cheap), but the scenery was mindblowing, and we saw whales up the yin-yang.
Tour the East Coast of Canada. Picturesque towns. Gorgeous countryside. Incredible seafood. Funny accents. Lots of beer. Can't miss.
Bahamas. They actually have a decent standard of living there, so it seems less colonialist to vacation there. Good seafood. Wicked cocktails. Beach, beach, beach. Not too expensive. Bring lots of sunblock.
Also, I haven't been, but I hear Turkey's nice, and not too expensive.
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Dull sublunary lovers love,
Whose soul is sense, cannot admit
Absence, because it doth remove
That thing which elemented it.
(From "A Valediction: Forbidding Mourning" by John Donne)
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