Wow. A lot of heated debate on this issue. I'm glad to read people's take on it though, so keep it coming.
In assessing power vs cost, I think the most straightforward approach is to compare it to a permanent enlarge person spell which is 2500 gp. Power-wise, the benefits (and penalties) are in effect every combat, which is the only time it matters power-wise and seems to be the main concern of those who propose an increased cost for the item.
Each option has pros and cons on its side. On the good side, the permanency spell requires no actions to activate, takes up no body slots and can't be stolen. On the downside, there's the added hassle of not being able to end the effect when it would be helpful to do so and there's the risk of having a high level opponent dispel the effect permanently. As for an equivalent item the main benefits are that the effect can be ended when desired and it can't be permanently dispelled. On the downside, it costs more, takes up a body slot and the item can be taken from you.
In my mind, the difference between the two isn't so great and consequently the prices for each should be fairly close to each other. I'd say increasing the price for the item by 1500 over the cost of the permanent spell and adding in the body slot requirement easily makes up for the added benefit of being able to discontinue the effect when desired. If the price we're much higher than the 4,000 that the guidelines propose, I'd probably just opt for the permanency effect and use reduce person spells as needed to get around obstacles. Thoughts?