Well, when you're shelling out several hundred bucks a month on rent, food, electricity, etc., just to stay alive, $700 isn't as big of a number.
And good headphones are expensive. Lots of headphones cost $300 or more. Sure, you can get some cheap headphones for $10 or $20, but once you've had a good pair, it's hard to go back. $60 isn't that bad when you think about how a monitor or current-gen video card costs several hundred bucks...