We were in Rio for 8 days over New Year's and had a fabulous time. All the restaurants we went to were VERY cheap. There is a little chain of cafes called Cafe Ina that had yummy sandwiches for a late afternoon lunch. If you plan on spending anytime on the beach I would recommend camping out around Barraca de Marcelo which is right across the street from the Cesar Park Hotel. The staff there were wonderful and very helpful. We would eat and drink all day and our most expensive bill was R$100 (~30 USD). This was probably highway robbery by Rio standards but consideriing we drank tons of bottled water, alcoholic beverages and had lunch, and this price also included our lounge chairs and umbrella rentals for two people we thought it was a bargain. What resort in the US could two people eat and drink and rent chairs for a total of thirty bucks!

For more info on our trip you could read my trip report if you are interested.
http://www.flyertalk.com/forum/showthread.php?t=386850