"I can get an EEE PC for that price, install windows xp on it and have everything the iPhone has"
I hope you realize that you can have everything the iPhone has that you perceive you want, not everything the iPhone has. I trudge into this thread wearily, since I have been privy to this debate since the 1980s.
But do you think, just maybe, that while you do not care for it, there are others who value the design inherent in an iPod's hardware and software that gives them value compared to Windows XP?