As you guys have said already, the prices back then were pretty high. The issue now is that games from the PS2 and XBox were $50 new. With the 360 and PS3, games went up to $60, and many popular games have at least one version of a "Collectors Edition." That is why people think gaming has gotten more expensive, plus DLC (as someone else put it) is an added cost, and a small side cost is XBox Live membership.
Honestly, I think things are priced very well right now. Prices drop on a lot of games soon anyway. With the amount of quality games out there now, you really have to pick and choose what you play, and no one is going to buy every game when it comes out, so you still have the chance to play it later and pay less.
The things that really get me are all the "Avatar add ons" that you pay Microsoft points for that go to your avatar on Live. Am I the only one who didn't just set up my avatar when I had to and forgotten about it? Or, am I the only person without a $200 head set? The standard head set works just fine for me, and if I ever wanted to upgrade, I probably wouldn't spend more than a game for a head set.