I hardly have the time to get into a discussion about how awful our tax code is, but I can at least offer this piece of advice for any residents of California, Michigan, Montana, or my home state of Pennsylvania: do it the cheap and easy way. E-filing is yet another great internet convenience, and the federal government offers a free e-file program. This is the wonderful offer you always hear about on H&R Block commercials - FREE 1040EZ FILING! These companies still need to make a buck though, so if you want to file your state return through them or claim certain deductions, you better pony up $35 or more. Less-known companies looking to break into the market will hover around $15.
Enter the non-profit sector. I used I-CAN! E-file last year when it was free, and this year, it's still only $4.99 to do your federal and state return for residents of the aforementioned states. If you're from somewhere else, check out this page and do shop around: different companies offer different states for different prices. Anyway, to use I-CAN! E-file for $4.99, go through all the filing stuff and on the page where it asks if you want to e-file both returns, click the "Legal Genie" link at the bottom. This will take you to their site, where you need to click "Register," fill in the fields (you can use a throwaway junk email here, just make sure you have access), and click the discount code link. Fill in that empty field with the code from the email they sent you when you registered just now.
As a side note, there was one company that offered PA at $4.95, but I have no personal experience with them. Four cents is a worthwhile price for me to pay to use a company I know over one I don't. Also, most of these freefile options only apply if you make below a certain income.
UPDATED: March 3, 2012 to include detailed instructions for discount