May not be legal but in my view its keeping that software alive for people who still care to use it. The original software makers, many are long out of business, or moved on to pc/mac and don't care. If they did, I'm sure they would protect their titles more.
To people who really care about that old software, it is really nice and convienant to get like 2000+ games ready to go already installed. I got one myself and really enjoyed it. It was only slightly more expensive than a 4gb cf card by itself. I think it was a fair price for the time the seller took to format/copy the files.
Steven