Tracer, exactly when does it become space flight? 100km (~62miles) above the Earth's surface is considered the internationally agreed boundary of space. The contest required that the spacecraft fly higher than that, and it did. They reached orbit, and were experiencing weightlessness.
As for the marketability of it, space travel has remained popular even now that it is fairly commonplace to know about it. Today, for a few thousand dollars, you can fly on a specialized jet plane, that, during a single dive, will give passengers complete weightlessness for over a minute. For those who can afford the trip, it's very popular; each such plane can hold between 10 and 20 people, and they fly several times a day, with a full load (that's over $100,000 a day). If that's still popular (decades after it was first offered), then space travel, I presume, will also be at least as popular. People have been willing to pay millions of dollars to get a lift into space, even if they knew they would do virtually nothing. For $200,000, I do think that many people (who could afford to, that is) would be very willing to fly like that; seeing Earth from so far up, along with complete weightlessness for at least five minutes (I suspect comercial flights might actually orbit the Earth, giving times as long as 90 minutes), would be very attractive to those with the money for it.
As for the cost of it, the project took somewhere arround $30million to fully develop. I would presume individual craft would be much cheaper to build, perhaps a "mere" $10-15 million or so.
Wake up, George Lucas... The Matrix has you...