Personally I think of DLC as expansion packs and as long as the price reflects the content I'm all for it.
The soon to be released Dragon Age DLC for instance is priced at £20 (UK) which is how much you could potentially get Bioshock 2 for (if you have 3 other mates who want it) or the new Aliens Vs Predatory game (if you get it from play.com or amazon.) That doesn't mean it's not good value, if you read the feature list which includes 5 new allies and a whole playable campaign (by the look of things anyway).
What I wouldn't want to see is "weapon packs" or multiplayer "map packs" sold for that type of cost. I just don't see that as value for money.
Using Bioware as an example again, I'll probably be getting any Mass Effect 2 based DLC because I'm just so into it. This is why, for the most part, I can understand why people buy DLC for the games they really love.
But there's one game that I don't understand the DLC strategy for, a game I shall probably never play because it makes as much sense to me as football.
Railworks is a train simulator game, and is described like so:
RailWorks: a new concept in train and rail simulation. Drive 13 different locomotives along 8 different routes in the UK, North America and Europe. Download new routes, locomotives and rolling stock or create your own design and share it with friends
I'm curious to whether anyone owns the full set, or if they're targeting specific sub-sets of locomotive enthusiasts. Perhaps some only buy the British trains, and they are the target market for the Isle of Wright set?
On the other hand, I don't understand MMORPGs and their costs. Anyone who plays WoW spends £300 in just over 2.5 years in subscriptions, so perhaps this isn't so unusual.
As usual it feels like it's geared towards what some people will pay rather than what it's actually worth. And I have to admit, if a £20 DLC comes out for Mass Effect 2 I'd probably have a hard time resisting it! Emotional responses are a bugger.
Luckily it's all been free DLC so far! The best kind...