Yeah, VHS are release initially at a higher price that rental places have to pay, after a couple weeks/months, it goes down. Now, there are exceptions, such as when a film like Shrek comes out on video before christmas, when they want to sell a ton of them as christmas presents.
DVDs are cheaper because they are trying to get people to buy DVDs and DVD players, and being able to own the movie sooner (than if they bought VHS) makes it more tempting for the consumer to buy a DVD player, and buy the DVD. This is especially true since most places don't have much of a DVD rental section, so they need to make sure people can watch the movies they want to watch so they don't get fed up with the inaccessibility of DVD and go back to videocassette.
Don't worry, DVDs will be expensive as hell on release in a few years.

EDIT: Me grammar gut.