The Olympics are costly for a city and cause a lot of traffic nightmares, but bring in a lot of tourists and spectators and tons of revenue from the visitors buying things around the city and from them staying in hotels. It also brings a large amount of money to the city and country through the companies who advertise during the games.
Yes, I think that it is an honor and definitely worth it to host the Olympics. When a company hosts the Olympics it allows the government to invest in infrastructure for the event and also have tourism go way up. When this happens, it helps the country's local economy and is beneficial.
With the incredible amount of debt our country finds itself in, I can not imagine there is any good use to borrow more millions of dollars to "throw a party". While the amount of money that will be brought into the country by the Olympics, I believe very little will make it back into the governments pocket, certainly not enough to make back what was spent. As far as the long standing tradition, another willing host could easily be found, and pride is not a good reason to increase our country's debt.