I think the "steel is expensive" saying was pretty much spot-on for 1996-2006 (ish). Those years there were a couple of odd low-end tank-like bikes that most enthusiasts wouldn't care for and quite a few high end custom or semi-custom choices in steel. Very little to be had in the mid range.

Surly started selling lots of midrange steel and other companies seem to be jumping back into steel.

In the MTB world steel seems to be very popular in the 29er market primarily, perhaps we'll get some more nice steel frames trickling down into 26" also.