Oh the eternal spiral again.
G110 is near 45% bigger in die size.
They could've tried with 40nm? Yes. They wanted to do it? No.
They gain a lot of marketshare in the process.
Bang for buck is also good in the high-end when possible. 4870 instantly hurt 260/280 sales with some much effect that some partners decided to return $$ to their customers after the drastic price-cuts of the 280. So yes, bang for buck matters. You don't gain nothing with the godzilla chip for bragging rights, especially at gpu's where people are not that zombie-tamed by the likes of intel(cpu). Either of the two can win the marketshare wars.
Since this is all about the 1GB chips:
Sapphire HD6950 1GB is already on pre-order (1-2weeks for shipping)
http://www.hexus.net/content/item.php?item=28390
245euros
US prices:
$260-270
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