Some of the places online have great yarns for great prices. Check out www.knitpicks.com
. I would also have to second checking out second hand stores, if you're not looking for yarn for a HUGE project (say, you're only making mitts, a shrug, or a hat) you can find some good yarn at thrift stores. You have to keep your mind open about colour but if you check fairly often you can find some bargains. I pass a giant thrift store on my way home from work and I stop in about every other day (well....I used to, before my stash got so big it started threatening to attack me), I've found amazing yarn, much of it all natural fibres, for $1 a skein or less.
If you're looking to make a single coloured sweater for your 6'5", 300 lb uncle...you will probably have to shell out the money to buy yarn the "expensive" way. If you want to make smaller projects, or don't mind having stripes, the thrift store is your best friend.
As for recycling a silk blouse...I'm not speaking from experience so I could be wrong but I think you would need quite a few blouses in order to recycle them and get enough fiber to knit anything substantial.