According to whitehouse.gov (cached in Google), George Bush's inaugural celebration was 3 days long, so it's not like Obama's celebration is any longer, it's just being televised, whereas the last inauguration wasn't. And to echo what Cheeze pointed out, the actually celebration is is paid for out of private funds. The tax expense parts come from the logistical needs of dealing with such a large influx of people. Congress didn't just hand Obama a sack of money and tell him to party it up, and Obama can't be blamed for the fact that a lot of people came to see the inauguration of the first African-American president.
When you consider the fact that, in the year Obama was born, black people were being imprisoned and killed in the struggle for civil rights, that in the neighboring state of Virginia was closing public schools to avoid desegregating them, that even public libraries were whites-only, Obama's status as President of the United States is an incredible turning point. Of course people are going to show up in unprecedented numbers, completely aside from anything specific to the man himself. So what are you going to do? Refuse to put out extra security and port-a-potties and let Washington DC literally go to shit under the weight of the crowd? Washington DC, Maryland, and Virginia requested federal emergency funds, the Obama campaign didn't.
Personally, I'm not thrilled about the rock-star treatment Obama is getting from the media because I worry it will blow up in his face. But the inauguration on the TV? I can't get worked up over it. What else are they going to put on the news these days. "This just in--it's STILL really freaking cold! And all those people from the plane crash? Still alive! Fancy that. Oh yeah, there's that whole Israeli-Gaza thing, but no one wants to watch that. Lousy ratings and you have to think about it way too much. Did we mention that it's really freakin' cold?" Or just run regular programming, because I really am missing All My Children, Maury Povich, and Judge Judy.