New IPod

A student told me about the new iPod Nano. I have to say it's really cool, but why so expensive? I have a 40GB ipod that I use for file storage as well as listening to podcasts and I love it. My professional and personal life would be screwed up if I lost it (yes, I have backups). But why so pricey? I just saw a competitor mp3 player that was $109 and it held 5 gigs of data vs. the 4 that one of the Nano versions hold. It's not as small as the Nano, but it's close. I like Apple and their products but should I pay $140 for style?