Two things come to mind, actually three:
1. People are forgetting that they're not just getting an MP3 player (a la iRoq), they're also getting a fully functional Firewire/USB 2 hard drive ... and all that entails. Look at comperable prices on USB flash keys and you'll see what I mean. (price, etc.)
2. Many, many, many manufacturers tier their products so that the low end is closer to the bottom of the high end. Car manufacturers do this all the time. The fully loaded Focus Sport just overlaps the bottom end Mustang. Look at other auto companies and you'll find the same. It's how they get people who are teetering on the edge to say "what the hell" and buy up.
3. People who like the size, weight and color and want something just a little different that will make other 'Pod owners a twinge jealous won't buy up. But now they have an alternative.
4. The price will come down, fast. Regular iPod sales are still hot. In fact, they're still a pain to get. This does two things: doesn't cannabilize sales of the big 'Pod, and provides a better alternative to someone who might have gotten something else instead. Did I mention the price will come down? 'Pod prices themselves have gone through a bigger/cheaper cycle depending on the price v. size cycle that the drive manufacturer is in - not because of Apple.
oops. that was four, huh?
By the way, I agree with Paul. It's likely they couldn't get the price down without a redesign, and that the big 'Pod will see some expanded functionality and design changes.
I'd also like to point out that whenever you products that are similar, but appeal to different sensiblities, and are close in price, you alway get this kind of pooh-poohing of what's just a choice of taste/lifestyle. (good example: the closely prices BMW 3 series vs. the Impala SS, both similarly priced. Many Beemer snobs looked down their noses, but I'll bet anything Chevy sold more of them than BMW sold 3's that year. And the SS was essentially a modified design going back to the '50s Bel Air. You might say "well they're dumb", my guess is you've never driven an SS. Again, it's simply a matter of taste. Like the mini's.
If you check the Educational Store, the mini's are 30 bucks cheaper. There's room to shave. Remember folks, they are trying to make money. And not everyone needs 15GB. There's an awful lot of happy 5GB iPod 1 owners out there.
The iPod Mini Is Not Over Priced