Well, it adds extra features that you didn't previous have, so in that respect it's not bad value. I got it free for my iPhone 3G, and it's great. Copy and paste is worth it alone, in my opinion.
Why they charge for it (and why it's not Apple's fault, but US tax law):
After the ENRON scandal, a tax law was introduced to try and stop this kind of abuse, called Sarbanes-Oxley.
What it essentially means is that you can only supply a product to a consumer with features at the time of sale, i.e., before that sale has been put on your accountant's books.
The iPhone and iPod touch (in fact, iPhone and pretty much all the other stuff Apple sell) differ in the way they do the accounting. iPhone sales are accounted for over a several-month period (24 months I think?), which means that an iPhone you buy today isn't fully accounted for by Apple as a complete sale until several months after.
iPod touch is the usual accountancy model (I'm not an accountant to don't know the proper terms), in that once you've bought it, it's recorded by Apple as a complete sale.
This makes some kind of sense for physical objects, but I'm not sure it makes any sense at all for physical objects that receive non-physical (e.g., software) updates, like computers.
If the software updates are just small bug fixes and corrects to the original software without any substantial new features, they can release it and not put the new item on the books.
If the new software includes new features, they have to put these new features on the books as a sale (some small amount), in order to comply with the tax law. This only has to be done if the software is delivered after the product has been accounted for.