It's not $200, it's $189 
I got it for $169 at Best Buy a few months ago with a rebate, and as another thread here has indicated you can open it and exchange the drive for larger then 160GB when you outgrow it.
I also bet that the 120GB version will show up cheaper on ebay eventually, this is still very much a new product.
I bought it, and I have to say, it's one of the best built external USB enclosures I've ever seen, and since it has a Seagate drive in it, it's almost silent.
With it's special size, perfect fit in the HP cabinet, and very high build quality, I don't view the added expense over a more generic drive as all that bad.
Diane