it all leads me to wonder if that expensive stuff actually "feels" like it's THAT much better or it's just for "prestige" or the flashing of da bling that gets people to spend that much 
I think it is primarily the former. As I said before, that $800 pillow felt unlike any pillow I have ever felt; if I had the money to piss away, I would certainly have bought 2 or 4 of them. When you buy a Bently or a Benz everyone can see your car. When you buy an expensive pillow, the only one who knows about it is you.
We all have things we indulge in: jewelry, cars, clothes, stereo equipment, vacations, etc. There is nothing necessarily wrong with this. Rich people are simply able to do it on a scale that most of us can only dream about.
Ah, to sleep on that pillow... Sigh.
