I don’t understand Ebay and what’s going on there

in the past weeks I have tried to buy an iPhone, possibly new or semi-new, 3g 16gb. the money people are paying for this items are sometimes shocking (400 pounds and more), but today I think I have seen something I can’t even believe:
one such iPhone has sold for 1019.19pounds. Yes, over 1k! Ok, I just noticed it’s a 3GS, but it’s 583pounds the 32gb from the UK apple store!
I know, it’s a free market.. I guess that must be the explanation. Am I the only one to be shocked by these auctions?