Supply and demand, currently the supply for flash memory is intense due to MP3 players, cameras, mobiles phones etc etc etc.
This means more are produced the more that are produced the cheaper they become so this pushes costs down.
Currently as some has pointed out at somewhere like
www.ebuyer.com you can buy a USB drive for £9.99 and get a 1GB!
Alternatively for all you PSP users and Sony Cybershot users one of the cheapest places for Duo sticks is
www.play.com
Prices will continue to fall though I expect for another 3 years, the first sub £50 5 GB USB drive is not far off.
Hope this helps