If I am a US citizen, do I need a passport to go visit Canada at Niagara Falls for 3 days and then reenter the USA?
No, but under the United States' Western Hemisphere Travel Initiative (WHTI), the other documents you could use instead of a passport are fairly limited:
U.S. citizens can present a valid: U.S. Passport; Passport Card; Enhanced Driver’s License; Trusted Traveler Program card (NEXUS, SENTRI or FAST); U.S. Military identification card when traveling on official orders; U.S. Merchant Mariner document when traveling in conjunction with official maritime business; or Form I-872 American Indian Card, or (when available) Enhanced Tribal Card.
(If you are under 16, or under 19 and traveling with a youth group, the requirements are looser.)
Canada will admit you with proof of ID and citizenship, such as a US driver's license and birth certificate, although they don't go out of their way to note that it is possible to use documents that don't comply with the requirements of the WHTI.
If you do travel to Canada with such documents, you will be able to re-enter the US because the US can't deny re-entry to a US citizen simply because she lacks the proper documents. There is a fee in the works for people in that situation, but for now you can expect nothing more inconvenient than a delayed entry to the US along with a scolding by the border officer.
The passport card is $30, and enhanced driver's licenses and state IDs also cost $30 more than their non-enhanced versions. If you do not want to shell out the money for a passport, this would probably be your best option.
You need either a passport, a Nexus card or an Enhanced Driver's License to enter Canada. See this.
For returning, you can use a passport, Nexus card, Enhanced Driver's license or a birth certificate. Official information here.
So, to answer your title question, no, but you do need another proof of citizenship.