I work for an online e-tailer who has been doing a lot of importing (over 2000 units so far) this Christmas.
The price hike is partly due to the extra costs involved. Most of the retailers are buying "off the shelf" at retail price in bulk. Then add the cost of air freighting, insurance and changing plugs. It all adds up.
Now include a slightly better profit margin that retailers can make when selling them at £179 (around £8), and I think the high price is more than justified.
Retailers are taking huge risks paying cash up front to unknown suppliers in Europe to secure quantities for people for Christmas since Nintendo failed to meet demand.
Sure prices might be out of proportion to the value of the product, however there are people willing (and desperate) to pay it. Those that aren't can blame Nintendo and wait until stock finally sorts itself our late Q1 2008. You cannot blame the retailers at all.
As an aside, a small bonus in paying over the odds for a European import is that you get a 2 year warranty instead of a 1 year warranty!