Looking at Cisco from a hardware perspective, yes they are overvalued and there are less expensive, comparable options out there.
However, I will say a few things in Cisco's defense - I've worked with Cisco, Dell PowerConnect, ProCurve, Avaya and Nortel -- hands down, when I do run into problems, Cisco is the easiest to troubleshoot for. Mainly finding documentation/community help is much easier. Finding technicians that actually know what they are doing is easier.
The other thing I would like to say is that Cisco is not always as expensive as people want to portray them. A lot of time, things like West Virginia happen - the options aren't investigated properly, and you end up with a 20K router... A great example is before I got to my job, they were buying all 3550 switches for the wiring closets.. We didn't need a layer 3 switch in a closet, so we started ordering 2560 (the next gen model in that series) and significantly cut costs.
Another example of ours, we had implemented Cisco Wireless in one of our locations, but for another location were sold an Avaya on the promise that it performed just as well and would be cheaper. The later proved true - but by a small margin. Performance and support has been an issue since day 1. Trying to find engineers inside Avaya that know their own devices like a comparable Cisco engineer is few and far between.
The last thing people don't realize - you don't always need a smartnet.. We don't order them for all our wiring closet switches anymore - we just keep our latest round of switches on SmartNet. Cisco Catalyst does have a LIFETIME warranty on the hardware... The same thing that HP Procurve tries to sell customers hard... Core switches, we absolutely keep on 24/7 4 hour Smartnet ... Wiring closets, and branch routers... nah... we can just keep a spare or two, they are cheap enough. Replace when needed, send back for lifetime warranty...
With this said, I'm not always rosy on Cisco. We did a VoIP project about 3 years ago, and going with another vendor (Mitel in our case) gave us significant savings. I'm just saying that they get the overvalued label a lot, and yes, if you are just looking from a hardware perspective yes. If you are looking at the whole training, support, community and logistics angle - Cisco definitely has the leg up on any other networking company.