As far as insulation, it can be as cheap or inexpensive as you want it to be. I picked up a GI closed-cell foam pad on Ebay for about $5, and it works great...so do yoga mats. If you want to stay away from pads, an underquilt can be made if you've got any skills with a thread injector (sewing machine), and down can be found at thrift stores if you're lucky. Alternatively, I very highly recommend Lost_Biker and his website, underquilts.com for raw underquilt shells that you fill yourself - down pillows can be had for about $40.
If I want to hang side by side with my son under the same tarp, how big does the tarp need to be?
One thing that led us away from the tent was the cost of a insulated pad. We plan on hiking upstate SC in spring and fall and would need protection if the temps dropped. The expensive light high r value inflatable pads might be popped from our rowdy dogs, and foam would be uncomfortable. I was hoping the hammock would make inexpensive foam insulation more comfortable. The cost of a down outer quilt would probably be too expensive for us right now.
We are planning on getting the Kelty cosmic down 20 sleeping bag for around $ 110. It is fairly light. The backpack we are looking at is the Golite Jam 70 L. If I can find lightweight tarps at a good price our big 3 should not be very heavy.