I can definitely say that a "budget" approach to Japan works really well. The backpackers place I stay in (K's House - sites in Tokyo, Mt Fuji, Kyoto, Hiroshima, Izu Peninsula) is about $40 a night. The ones I have stayed in are really nice. The key thing is snapping up the flight deals. But I do know that the Japanese government is considering funding a significant number of FREE flights from April next year (to revitalise the tourist trade). So there could be even better deals coming.