From a buyer's perspective, I think eBay is dominating the low-quantity/small-sale market.
If you need something simple and are not in a hurry, eBay likely has it from an overseas seller for incredibly low prices. For example, say you need a HDMI-to-DVI cable?
$2.65 shipped on ebay. There's no way that Newegg (or any other US retailer for that matter) can make money packaging and shipping things at those prices... and in agreement with DaveSimmons, they probably have to raise prices across the board to offset the losses. (For reference, the equivalent cable on Newegg is $6.24 with $2.89 shipping.)
It's much smarter for Newegg to still offer good prices on the small items to entice buyers... but then have a higher free ship minimum so that they have a better opportunity to make more than a few pennies on the sale. It's sort of like how Best Buy used to (perhaps still does?) sell audio CDs at a loss, just to get you into the store, so that you would buy other things while you were there. Only with online vendors and free shipping on small purchases, people wouldn't actually buy anything else.
