There is no doubt that Leupold scopes are, within their respective category, the most expensive scopes. It's not to say that they are bad, just the most expensive within their respective model group.
I too believe that the VX-I is overpriced. Let's take a look at the VX-II. It's a great scope. Heck, last year or so, it used to cost the same as what the new VX-IIIs cost. However, you can get, say, a Nikon Buckmaster which is equally as good as the VX-II (if not better optically) for noticeably less money.
For me, though there are other factors that make a Leupold more attractive. They are generally lighter and smaller than the competition, and they generally have longer eye relief. Combine that with one of the best warranties in the business, and spending an extra $100 or so may be worth it.
For example, I have a Kimber Montana in .300WSM. It's a lightweight rifle, so it doesn't make sense to buy a long heavy scope. Plus, I needed longer eye relief. I could have bought an Elite 4200 2.5x-10x-40mm, but the VX-III 3.5x-10x-40mm was just an almost perfect match for that gun and use. As such, I didn't mind spending the extra money. In the long run, it isn't going to make that much of a difference in my pocket.
Again, for some applications, I think that spending the extra money to get a leupold is justified. In others, however, I just find Leupolds to be just plain overpriced.
Zachary