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Vacation Calendar in Exchange/Outlook

We have Microsoft Server 2008R2 and Exchange 2010.  We want to have a vacation calendar where employees would 1) email the boss with a vacation request and the boss would be notified, and if he approved, it would insert their vacation days into the calendar, or 2) enter it into the Vacation calendar, the boss gets notified, he approves, and then they get notified.  We tried and couldn't make it work, then someone told us about Sharepoint, but I just watched a video and that seemed like overkill to set up just for vacations?  Any suggestions?  What is the usual practice?
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OK, so it seems you are saying that the free SharePoint Designer 2010 can do all the above, which is just about what we wanted to accomplish.  1) Is this already part of windows and I just need to activate it or is there a reliable download somewhere.  2) I clicked on your link above, but received IE's typical error, "Internet Explorer cannot display the webpage."
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Great information.  Will try Outlook/Exchange solution first and see if it provides the full functionality I want, then try Sharepoint, if it doesn't.  Not making you wait until I implement this, but giving credit now for good info, which is what I wanted.  Thank you.