Upon reading the newest EGM issue, I came across a rather interesting rumor in the Quatermann section called Rumor Mill: "OK, the Wii is winning the console war right now -- no need to argue that one. But Sony may have a sneaky plan up its sleeve. I'm hearing it will repackage the Playstation 2 to compete with Nintendo by including a Woo Remote-like waggle wand for $99 this holiday season. Now let's just hope they don't call it 'Pii.'"
Yes, they would be copying Nintendo. However, this would be genius. Considering the Wii is about as powerful as an Xbox, and the previous generation was dominated by the PS2 despite the Xbox being more powerful, if you take away the only thing the Wii does better you have a real advantage.
Obviously, the disadvantage is that all Wiis have a wiimote already. However, at $99 the PS2 would have a far better library (the best in history of gaming...arguably?...if you so choose) and a much better price point for new Waggle users.
Also, you could just show how cheap the tech is and sell it for cheaper than Wiimote (and the upcoming Gun for Time Crisis).
This would effectively pit the PS2 against the Wii for the rest of the generation, and continue to spur Wii ports to the PS2, such as Rayman Raving Rabbids. The extremely high install base could easily buy a new controller for these games.