The 9800GTX wasn't *that* much slower than the 4850, so the 4850 was forced to be priced somewhere around the 9800GTX's price. It was, and actually took a further step by being released at a slightly cheaper price point - sufficiently low to drive the loyal NV masses to ATI. If it was similiarly priced, people would have stuck with their existing NV cards / said 'oh ATI are still struggling to beat NV's old 8800/9800GTX 2 years on'.
The 4870 is basically a 4850 with different memory, and higher clocks. You couldn't justify a massive hike in price, not with ATI's rep at the time (they've done it before aka X800XTPE and X1950XTX, but at this point they didn't have the rep to pull it off), so it was a smallish jump. There was also a second reason - significantly undercut NV and you accomplish multiple things:
1) Decrease NV's sales dramatically, increasing your own
2) Gain marketshare rapidly
3) Make NV look like they're price gouging
4) Hammer NV's bottom line, GT200 is exceedingly large and expensive to manufacture. But forcing the price down so massively - you severely weaken your strongest opposition
It's all in the marketing. Both NV and ATI realise the biggest asset you can have is a loyal fanbase, it gets you through the weaker generations like the FX5800 and HD2900 as well as maximises long-term profit.
ATI needed a bang, and they got it. It'll be interesting to see whether they do indeed keep prices low; or as soon as they're back on top, start releasing high-value cards once again.