I guess most people think games are expensive when they compare them to, let's say, the price of N64 games or PS2 games, which was $30-40 tops. $50 if you wanna go crazy. Yeah, there's the cost of production and the fact that games are fancier now when it comes to graphics and gameplay and music and stuff. So yeah, they are expensive but they're also better.
New games are released almost every Tuesday so you can imagine games devalue like crazy. Look at the hot titles of last year and compare their current price to its launch price. $60 for Gears 3, AC: Revelations, Rayman, and so on run around $20-40 and that's not even a year after their release. But most people don't wanna wait for a game to go down in price. If they're looking forward to a game, they wanna have it now. If you're a gamer, you know what that feels like. And if you have the money, yeah, you know you're gonna buy it.
I usually try not to buy games on their release day but I'm guilty of having doe so a couple of times before. The way I see it, a pair of jeans can cost around $20-40, but they're gonna hold for a while. So it's the same with games. I can probably replay a game forever (Depending on the game), so I'm getting my money's worth. Of course, when you buy a new game every week, you start to see how expensive they can be. but just like when buying jeans, if you buy them when you feel like you need something new, then that's fine.
Having said that, some good games just refuse to go down in price so I can see why pirating is a good choice. I wouldn't dare mod my PS3 or buy pirate games. There's something about owning the original box and game that just makes me proud. However, my friend recently gave me his Wii with a bunch of modded games. I'm not a big Wii fan myself but the console came with at least a couple of titles I'm curious about. Together, those titles would cost me around $200 at a retail store. Used. And those are just 4 titles. And while they're good games, it's kinda silly they're still so expensive years after their release when you consider some good games are way cheaper not even a year after its release (See above).
So to summarize, games are expensive but just like with everything else, you gotta know when to buy them instead of going around throwing your money at random games every other week or so.