Cost and value for money aren't the same thing
It's not £1000 vs £500, you're comparing a thousand dollars to five hundred pounds.
UK pricing for the 11.6" starts at £849
In any case while it's tempting to do so I don't think giving it a beating over the price really stands up to objective scrutiny. Look at the Dell Adamo or Sony Vaio X which are similar in design philosophy and the MBA is good value by comparison.
I know it looks expensive against the laptops in the recent el-reg 11.6" group test but that's not comparing like with like - once you take into account that the MBA has a good tech spec (dual-core CPU, high rez screen, dedicated graphics, SSD), the battery life and the case design you see where the extra money goes.
It's not going to be for everyone for sure, but given it's a lightweight ultraportable with enough power to cope with a wide range of tasks I don't think it's that overpriced. Oh, and before the predictable cries of fanboi yes I do own an iPhone, and an iPad. I also own a 10" dell netbook running linux and a high end gaming laptop running Windows 7. Each fills a niche in my life very nicely thank you very much, and I couldn't care less who makes them, I like them for what they do.