About the cost of organizing the olympic regatta. Here is a link to the olympic sailing centre China have buildt for 2008.: http://www.sailing2008.org/ProjectPhotos/OlympicIntorEN.aspx

As you can see, it is quite a sailing centre, and no less would satisfy the IOC. The number of participants, both athletes and their support teams, in sailing is very high. I am not certain anymore, but sailing used to be one of the largest sports in the games, participant wise. Constructing the facilities on land, running the support/service apparatus on land and finally running _and_ producing the sailing part of it is more expensive than e.g. soccer or the 100m sprint.

The brits have much of this already in place at Weymouth for 2012, so they can perhaps do it cheaper. But sailing is still an expensive sport for the IOC and the hosting country to have in the games. When the income of media sales dont carry its cost, no wonder they want to reduce the event.