I am from San Diego too! Nice to meet you! Is this your guys first time to Ibiza? It will be my 2nd time to Ibiza this August.
If you take a look on this site at the hotels section I believe they will have hostels or cheaper hotels listed. I just went to Priceline to find my airfare. We are going to other places too so my route is probably different then yours. I suggest going on Priceline and entering San Diego to Barcelona and quoting real low and seeing if you get it. The only thing with Priceline though is that you have to purchase them if they can get the price you listed. We just entered in SD to Paris and got it for $587.00 each roundtrip. Then a roundtrip from Barcelona to Ibiza can be found on Expedia etc... for about $100.00 roundtrip. So, try the Priceline thing it payed off for us.
Uh, as far as getting around the cheapest way to get around the island would be by scooter probably, but just a fair warning they aren't that safe. So, I would highly suggest renting a small compact car for a few days so you can go to the other sides of the island. If you just stay around the main beaches etc. you will really miss out on the other fabulous aspects of Ibiza. Don't get me wrong the main beaches are great, but after a long night of partying it is soothing to go to one of the less frequented beaches on the island and just chill. That is, if you can make it there after a party! Hee! Hee!
Well, enjoy Ibiza and it is fabulous to see that another person in San Diego is making the long pilgrimage to the magical island of Ibiza! Once you go to Ibiza you will never be able to look at the San Diego club scene in the same way. It blows it out of the water big time!