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@BHR-3: That scenario doesn't make sense to me.

Sure, the 360 cut price just a few months ago. However, if the PS3 went down to $299, it would look like this:

PS3 w/ 80gb HD: $299
360 w/ 60gb HD: $299

I'm pretty damn sure the 360 costs less to produce - they would easily have room to respond. It may not be right away, perhaps it would be similar to this year (cut before the holidays), but Microsoft is gunning for second place, and they have the money to back it up.