Where can I buy older sets, such as the 10187 VW Beetle? A few years ago LEGO issued a wonderful set of a classic 1960 Volkswagen Beetle, for an selling price of $120. 

A few years have past and I can't find it anywhere except on eBay where it is sold for $400 and above because of its uniqueness and rarity.

Does LEGO still sell older models anywhere in the world? If not, where can I find them?
Assaf, please note that this is not part of LEGO's website. StackExchange doesn't sell LEGO sets. In regards to your question, you are right; the #10187 LEGO Volkswagen Beetle is no longer available directly from LEGO. It was a set that was released back in 2008.

LEGO usually keeps sets on the market for a couple of years, sometimes a bit longer if they are very popular. The VW Bettle has been retired quite a while ago, and as you have seen, it is only available on the secondary market. 

Besides checking on eBay as you have already done, you can also check on Bricklink. Prices are high, but occassionally someone may sell one for less if the set is used, missing the box, etc. Here is the link to the current listings: #10187 Volkswagen Bettle

LEGO usually doesn't re-release a set, but sometimes may come up with a model similar to the earlier release with improvements. I don't know if this interests you, but currently LEGO sells the VW Camper, which is an absolutely deligthful set. See here: #10220 Volkswagen T-1 Camper Van