What US shipping service would you recommend for small items?

[goatparty.livejournal.com]

Hi there! I've recently made the jump to selling small polymer clay items on Etsy, but so far I've had to shell out $5.75 per box for flat rate priority mail shipping (I picked it because it comes with insurance and tracking). Since my items are only $10, I feel like raising shipping to flat-rate price would deter customers.

My questions to folks who sell similar items are:

1. What service do you use, and what does it cost?

2. Are both insurance and tracking an option for it?

In the meantime I'll be researching this myself, but I wanted to get more experienced artists' opinions on this as well.

Thanks!

Edit: Thank you for the replies!