An XBLA game normally costs 400, or 800 points...that is actually £3.40 or £6.80 respectively.
I think many of the arcade games are great value for money. Sure they may be retro classics, but many of them have been updated to include support for Live so you can play against people anywhere in the world which I think is great with titles like Bomberman Live, Mad Tracks or Streetfighter 2.
Always download the demo first and give it a try before buying.
I do think many of the 800 MS point games are overpriced, but people must be buying them at that price point, otherwise they wouldn't sell them. Overall I've had a lot of enjoyment from playing retro games like Golden Axe and I've had some intense games of Texas Hold em and Streetfighter 2, so it's worth the dosh for many of the games.