People pay more because going to starbucks for coffee, or the bar for a drink, or a restaurant for a meal adds some value to the product. Quite often it's the atmosphere you get, but sometimes it's just the convenience. This doesn't apply with all products, however. With products, you get the exact same thing for a cheaper price, and it's a good thing. I'm sure almost every person here would rather pay less for something than more for that same thing.
I got the first year free because I worked at Apple and paid $69 to renew because the manager was cool and gave me the discount. MobileMe is definitely worth $99 to me (and really, more at times), but I'd choose to pay less every single time if I were able to.