If Sony and the other major publishers didn't charge almost double the prices for their games in Australia, as compared to other regions, then Australians wouldn't see mod chips as being so attractive. Current point. Many PS3 and 360 games retail at $120 Australian Dollars. With the current conversion rate, that would be expecting Americans to pay $106 for their new games. We know that in the US new games are around the $50-60 dollar mark. That means we'd like to see games around the $70. It's a pipe dream, and a sore point.
Thankfully, PS3 games have no region protection, so we can (and I do) import them rather than pay the local price. We're not so lucky when it comes to the 360 though.
I don't advocate piracy. I do pay for my games, and generally import them. That means waiting a few days before I can get my purchase though. A mod chip on the other hand is more of an instant gratification. I can see the appeal, even though I wouldn't go that route.