I see Priceline as analogous to shopping at a super-discount liquidator (or, for those familiar with Boston, the downtown Filene's Basement).
I stand a good chance of paying a significantly reduced price for the goods/services I'm buying, but I recognize that the overall shopping experience is likely to be skanky, and I'm liable to rub elbows with, well, low-lifes. That means that I might have a higher-than-usual chance of getting the least desirable room at the Sheraton or Hilton, that I might have to hold my nose and deal with the sleazy ethics of BiddingForTravel, or that I might wind up in a hotels which (with good reason) have the highest vacancy rates in a location.
I too would revise my earlier comments: if you can't charge the ordered meal to your room, it's not room service.
But it is Priceline.