Yeah I don't really think price is the issue at all. Though that price comparison doesn't really work. The added expense in going from 256 to 1gb is only in the addition of 3x256mbit chips. The cartridge, packaging, and everything else stays the same. Sure there is R&D and stuff that would need to be implemented. But the price of a 256 chip is probably very minimal to the total one pays for a 256 mbit card. Especially now that it has been so long that they have been out.
Anyways, I don't think price is the main issue. It is software. Everyone has come to realize now that software is what makes or breaks these devices. We used to think it was hardware (and to some degree it was, bugs, crashes, etc...) but now that those problems have all been worked out for the most part it is software and support that really makes the card worth the money.
Also one more point about the price, it really isn't a price per size comparison that shows the trouble with the $250 price point. Obviously in that area the user wins big time. But the problem I have with it is a price per actual value comparison.
i.e. Is 1gbit really worth the extra expense?
Will it make my life that much easier using my gba?
Can I really use all that space?
If I can use it all, is it important that I do so?
Would I rather buy a gba, gamecube, and a game for that price?
Questions like that are more relevant in this case I believe and will be different for every person.