Either taking an organized tour or trying to make your own way around China can be a rewarding experience. However, each method also has its drawbacks which you should be aware of. The type of travel you engage in should reflect the type of experience you want to have and it is important to recognize the limitations of each type of travel.
Most westerners who visit China will visit a major city (or cities) and use a tour guide. These are full service packages. They will pick you up at the airport, drive you to your hotel (with English speaking staff), pick you up in the morning, take you in a private van to the sight seeing destinations where you get in through a side door, take you to a westernized lunch, go to more destinations, and drop you off at your hotel around dinner time. They will offer to make reservations for you at a nice Chinese restaurant (with English speaking wait staff), and give you a card that tells the taxi driver where to go. At the restaurant, someone will be there to greet the taxi and help you pay the driver. This continues until they drop you off at the airport and you leave.
Westernized tours are a good way to see a number of historical sites and not work too hard during your vacation. Visitors are very well taken care of a very sheltered. This sort of vacation can cost about the same amount as a vacation in the west, and everything is clean and efficient. Even the souvenirs available in the western tours are of slightly higher quality and more expensive. However, people on these tours should understand that they are not experiencing regular Chinese life or accommodations. The cleanliness, comfort (like air conditioning or heating), and efficiency are not common Chinese traits.
For people seeking a more authentic experience, they should really try to get around by themselves. Be warned, this type of travel can be tiring, frustrating, filthy, and slow. Do not try to see 3 historical sites in one day. You may not be able to see anything if you also need to buy train tickets that day.
There are backpacker hotels with some English speaking staff that make finding accommodations easier, but are more authentic than 5 star hotels. These hotels are also good because you can meet other foreigners and get tips for the area. On your own, you will not be able to visit as many sites and you will probably get lost a few times, but you'll learn much more about regular Chinese life this way. For the more adventurous, leaving the large cities of Beijing and Shanghai will expose you to a very different China than that in the large cities. This is possible even for people with minimal Chinese language skills. A good travel book will give you enough information to get around and the use of Chinese characters can tell a taxi driver or train ticket seller where you want to go. By carrying a card from your hotel, you can always show a taxi driver and get home at the end of the day.