are Vanguard's funds really as cheap as advertised, or is there some catch to them?
There is no catch, you don't pay anything other than their advertised fees. Andrew Tobias has been using them as an example of a great way to invest in the market for years. (His writings on investing are great, ignore anything he says about politics on his blog.)
IIUC, since most transactions in the stock market are zero-sum (at least in terms of money), the fact that index funds make money despite using very simple and predictable strategies implies that on average, everybody else manages to do worse.
If it's worth saying, but not worth its own post (even in Discussion), then it goes here.