The main thing is, as far as depth of content goes, it clearly doesn't compete with similarly priced games (for instance, there's only a $10 difference between it and Zelda).
For many, anything more than $5 is too much and they really just don't have any interest in it. For those that are interested, though, they probably aren't that afraid of the price as it's entirely unique in the market.
I'll be buying it as it looks decently fun and I love these sorts of things when I have friends over, but I have no difficulty whatsoever in understanding why many think it's absurdly overpriced.
I personally think Nintendo would have been best served using this as a pack-in/tech demo, but I suspect they decided to sell it separately to make the launch lineup look a little less sparse than it is. That's unfortunate, as it probably won't sell that well on its own and might have been a fun introduction to the capabilities of the controllers and such for everyone who bought the system.
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