That's the way the world of business is run. You don't expect a company to sell something for cheaper then what it costs to make, do you? oh wait........
The technology has been around for awhile, yes, but making it smaller actually costs more. Maybe when the psp is released sometime next year, it might be cheaper, but who knows. By that time we could have $50-$70 SP's and Nintendo in full speed with its next handheld.