I think a lot of it is kind of "they make it, so I should buy it, it must be better".
Creative has a ton of different cards with incremental features and a wide range of prices they charge for the cards.
From the Audigy2 value onwards, all the creative cards seem to have very similar performance for taking the audio load off the CPU. The X-Fi seems to have an edge once you get into really high voice numbers in the sound.
A lot of people buy cards with hopes that it will speed up their gameplay / framerates. I think that should be considered a secondary effect at best. Money spent elsewhere towards a faster videocard, more ram, etc. is probably going to have a much more significant difference.
If you're concerned about that, the Audigy2 series when it was on sale for around $40 to $50 AR was a good deal. There seem to be less issues with that line vs the newer X-Fi.
It's possible that the $199 card you saw could have been an A2 or A4 as well. These are all variations of the same basic cards. Creative has made it very difficult to attach front panel connections to their Audigy and X-Fi lines so that you're forced to pay for an extra drivebay to get that functionality.
These cards will often come with remotes and other gadgets that drive up the price.
So, these Creative cards promise faster gaming and better quality output (with more surround effects etc).
Overall I think a lot of people spend way too much on their soundcards. At most, a 1:1 ratio of spending on speakers and soundcard would make sense with a 2:1 or higher ratio I think is a better idea.
Some people spend $200 on a souncard and then get $50 speakers. I think if they reversed their budgets, they'd be much happier with the final result.
If eveyone was spending as much on the speakers/sub as I did, then I'd say go ahead, get your X-Fi Elite Pro or something similar because you have the type of output devices where the increased spending for the quality output might actally make a difference.
As was mentioned, you can also get a card going for music playback for significantly cheaper that will do a fine job. The $30 Chaintech AV-710 is a great card for music. I think in general, music is where it's more important to get quality output than in a game. You're going to notice when things don't sound quite right during your favorite song vs. what it sounded like when the RPG blew up your teammate next to you.
Am I just rambling? I think I am. I better just stop.
I just got back from about 8 hours of class.