While funny. This claim is an urban legend. Source: http://www.snopes.com/business/genius/spacepen.asp
For the Lazy:
Origins: The lesson of the infamous "space pen" anecdote about NASA's spending a small fortune to develop a ballpoint pen that astronauts could use in outer space, while completely overlooking the simple and elegant solution adopted by the Soviet space program (give cosmonauts pencils instead), is a valid one: sometimes we expend a great deal of time, effort, and money to create a "high-tech" solution to a problem, when a perfectly good, cheap, and simple answer is right before our eyes.
As good a story and moral as that may be, however, this anecdote doesn't offer a real-life example of that syndrome.
Both U.S. astronauts and Soviet cosmonauts initially used pencils on space flights, but those writing instruments were not ideal: pencil tips can flake and break off, and having such objects floating around space capsules in near-zero gravity posed a potential harm to astronauts and equipment. (As well, after the fatal Apollo 1 fire in 1967, NASA was anxious to avoid having astronauts carry flammable objects such as pencils onboard with them.)
When the solution of providing astronauts with a ballpoint pen that would work under weightless conditions and extreme temperatures came about, though, it wasn't because NASA had thrown hundreds of thousands of dollars (inflated to $12 billion in the latest iterations of this tale) in research and development money at the problem. The "space pen" that has since become famous through its use by astronauts was developed independently by Paul C. Fisher of the Fisher Pen Co., who spent his own money on the project and, once he perfected his AG-7 "Anti-Gravity" Space Pen, offered it to NASA. After that agency tested and approved the pen's suitability for use in space flights, they purchased a number of the instruments from Fisher for a modest price.
TL;DR
The "space pen" that has since become famous through its use by astronauts was developed independently by Paul C. Fisher of the Fisher Pen Co., who spent his own money on the project and, once he perfected his AG-7 "Anti-Gravity" Space Pen, offered it to NASA.