Yes it is expensive because you have no keyboard, mouse or screen and extra memory is expensive that you cannot add yourself without voiding the warranty. For £399 you cannot make DVDs because that model only has a combo drive so the price has now gone up to £500+.
For that sort of money you can get a Dell desktop with the same processor, more memory, faster and larger hard disk, a faster DVD drive, better graphics card, keyboard, mouse, a better warranty and a 19" monitor. Plus the whole system is upgradable.
I had a Core Duo Mac mini for a while, it is a nice machine but the graphics let it down and I decided to replace it with an iMac instead.
My whole point is Apple products are very nice but they are not cheap, you pay extra for the design and the excellent software that comes as standard. They are the Lexus of the computer industry.
Most people on this forum have chosen to pay extra for a vehicle with a bit more quality and uniqueness, otherwise we would all be posting on a Ford forum.