It’s not $100 cheaper because they took out the case and the remote. Apple just did a model upgrade which they do every so often. The last phase of the 3rd gens had three sizes, a 15gb, 20gb, and a 40gb. The 15 went for $299 without a case, remote, or dock. The 20 and 40 for $399 and $499 respectively both including a case, remote, and dock.
With the 4th gens apple went down to two sizes, a 20gb and 40gb. The 20 doesn’t include a case, remote, or dock so essentially you’re getting a newer model iPod and 5gb’s more for the same price as the 3rd gen 15.
By the way, the Apple supplied case is crap. The remote is nice and works well and can be purchased seperately for $39. The dock (also $39 seperatly) is nice but not needed. The best thing about the dock in my opinion is the fixed audio out jack on the back. I just pop mine in my dock and turn on my stereo.