I'm sorry to say that answer isn't clear, and therefore you have a tough choice to make.
I write the following as a professor at an inexpensive, mediocre school.
If your goal is to go into local business or education, then you might actually be better served at the mediocre school, since there will be more local contacts. The money that you would not be spending in loans could be very helpful if you want to start your own business. If you plan to not take school very seriously, then the cheaper school is better, unless it's a very connected place, such as an Ivy.
As for planning to do a postgraduate degree, it's tricky. The two most important things here are that i) the school is large, and ii) it's not a total bottom dweller. This rules out a lot of the struggling liberal arts colleges (which I assume you're not referring to, given the cost, unless you're factoring in scholarships). But, I'd stay far away from a liberal arts school that is tuition dependent (as opposed to operating on endowment). This being said, it's not surprising that the above poster's friend is going to Cal from ASU (not too different from what I did). ASU is big, with (I'm sure) lots of research/mentorship opportunities; ASU is quickly overcoming UA for flagship status anyway (similar to what happened with Ohio State).
Now, if your goal is a PhD program and academia (which I definitely do NOT recommend, given the job market), you'll want prestige if non-stem, but if stem, the crucial thing is lab experience, which you can get anywhere. With respect to prestige, it's well known that many humanities-leaning fields (philosophy, famously) talk a lot about equality but essentially never take PhD students from low prestige schools.
If your goal is med school, definitely go mediocre. This might seem counter-intuitive, but there are two good reasons: i) you want to beat the curve handily in your lower division science classes (very hard to do at a prestigious place), and ii) you'll be acquiring a ton of debt later, in med school (yes, you'll earn it back, but the cheaper undergrad will make a difference). Med schools care about grades above all else, then a mix of lab/volunteer experience (can be obtained anywhere) and scores. You'll be at a slight disadvantage for test scores at the mediocre school, but you can overcome that much more easily (by studying more) than a bad transcript. A lot of the above will also apply to other professional schools.
For law, the market is so bad now that you almost need to go top-10 to be confident that you'll get a return on your investment. For that reason, I'd recommend the expensive school.
If your goal is finance or related fields (e.g. management consulting (if you're willing to sell your soul haha)), then I'd recommend the more expensive school. You'll cover more ground in your classes and graduate into a much more connected national alumni pool. Corporations will be more likely to recruit as well, if the economy holds up.
For the professional undergrad degrees, such as engineering or CS, you would really need to see what the placement records of the respective departments are. Overall, I'd guess (without much evidence) that engineering should be fine at either school, but (with evidence) that you should do CS at the prestigious school; profs at the mediocre school will be potentially outdated and certainly too overwhelmed by mediocre students to push cutting edge concepts.
In sum, if your goal is k-12 ed OR science/health related professional school, the cheaper school is good, as long as it is a large school. Schools that are both mediocre and very small are just depressing, and often financially very unstable (not that they are about to close - though some are - but the professors and the infrastructure will be scrapping by). Just be sure to be at the top of your class and take advantage of research opportunities. Your professors will generally be glad to have an ambitious student around.
For law, finance, and some tech (CS, specifically), go with the prestigious school.
If you're unsure what you want, it's very hard to say. If the economy continues as is, then you're probably okay at the expensive school. If it tanks again, the prestige school might be your ticket to a job in a tough market, but if that fails, then you could be looking at very painful loan payments in a bad economy. If you graduated in a 2009-equivalent economy, that would be very, very stressful.
Sorry for the long post - I guess I got a bit too involved.