Well, I was in something like your situation last year (shut out of a bunch of Ph.D. programs but offered an unfunded MA spot at a pretty amazing school) -- In the end, I took the advice of everyone on these boards and decided to not go into debt. Given my personal circumstances, I think that was probably the right thing to do, but, to make the facile point that so many others here have made, it really depends on the situation.
In your situation, I would lean towards waiting. I remember what it felt like to consider the prospect of waiting another year to reapply. It sucks. It feels like being sentenced to purgatory. But it's just so hard to predict what will happen over the course of a year. I got a great job in book publishing in New York, and now my work will actually pay for me to do an MA part-time (I'm hoping for NYU but we shall see...). Point is, I never in a million years could have seen this coming, and everything worked out great. I was so stuck last year in the mindset of must-start-grad-school-RIGHT-NOW that I almost decided to take on a ton of debt and move to a strange, unfamilar city with no financial support. So I guess my real point is that being super set on starting grad school right away can lead us to make not-great decisions sometimes.
That said, UW is a great school. I'm from Seattle and I love that place so much. I know several professors and a guy in the Ph.D. program -- he is one of the happiest grad students I know. Cost of living is pretty affordable (at least in the eyes of someone who now lives in New York), and although it's true that the place is pretty cash-strapped, I think the MA offer is worth some serious consideration.