The link "Save site as template" is only available under Look and Feel at the Top Level of the site collection.
If you are trying to save a site as a template in WSS v3 or MOSS 2007 you need to append _layouts/savetmpl.aspx to your sub sites url.
1. Supposing your subsite is:
http://portal.moss2007.com/subsite/default.aspx
2. You would go to
http://portal.moss2007.com/subsite/_layouts/savetmpl.aspx
and then you would be able to save the site as a template.
Note: there might be cases where this will not work.
Good luck!