Correct me if I'm wrong, but there hasn't been a 500 dollar iPod ever, or at least in a long while.
You're wrong about the "ever", but there hasn't been an iPod that expensive in the last three years.
The 10 GB model of the original iPod was US$499. That's also what I had to pay for my 40 GB iPod Photo, shortly before they reduced the price (and removed most of the included accessories). The 60 GB iPod Photo was US$599 originally, so the 32 GB iPod Touch is cheaper than the most expensive iPod.