America's first space station, the 75 ton Skylab was launched May 14, 1973 by a two-stage version of the Saturn V booster (the SL-1 mission). Severe damage was sustained during launch, including the loss of the station's micrometeoroid shield/sun shade and one of its main solar panels. Debris from the lost micrometeroid shield further complicated matters by pinning the remaining solar panel to the side of the station, preventing its deployment and thus leaving the station with a huge power deficit. The station underwent a extensive repair by the first crew launched on May 25, 1973 (the SL-2 mission) atop a Saturn 1B. Two additional missions followed on July 28, 1973 (SL-3) and November 16, 1973 (SL-4) with stay times of 28, 59, and 84 days, respectively. The last Skylab crew returned to Earth on February 8, 1974.
Skylab was actually the refitted S-IVB third stage of a Saturn V booster, a leftover from the Apollo program originally intended for one of the canceled moon landing missions (Apollos 18-20). A product of the Apollo Applications program (a program tasked with finding long-term uses for Apollo program hardware), Skylab was originally planned as a minimially-altered S-IVB to be launched on a Saturn IB rocket. The small size of the IB would have required Skylab to double as a rocket stage during launch, only being retrofitted as a space station once on-orbit. With the cancellation of Apollo missions 18-20 a Saturn V was made available and thus the "Wet Workshop" concept, as it was called, was put aside and Skylab was launched dry and fully outfitted. Skylab's grid flooring system is a highly visable legacy of the wet workshop concept.
Following the last mission the Station was positioned in a parking orbit expected to last at least 8 years. Increased solar activity heating the outer layers of the earth's atmosphere and thereby increasing drag on the Station led to an early reentry on July 11, 1979. Skylab disintegrated over Western Australia and the Indian Ocean, casting large pieces of debris in populated areas (without injury). The reentry prevented any further use by the then unfinished Space Shuttle as was envisioned by some at NASA.
Two flight-quality Skylabs were built, the second, a backup, is on display at the National Air and Space Museum in Washington, DC.
Instead they looked to reduce the year-to-year costs of development to a stable figure. That is, they wished to see the development budgets spread out over several more years. This is somewhat difficult to do--you can't build half a rocket. The result was another intense series of redesigns in which the re-usable booster was eventually abandoned as impossible to pay for. Instead a series of simpler rockets would launch the system, and then drop away for recovery. Another change was that the fuel for the shuttle itself was placed in an external tank instead of internal tanks from the previous designs. This allowed a larger payload bay in an otherwise much smaller craft, although it also meant throwing away the tankage after each launch.