I bought a 500gb external hard-drive for around 140 dollars (115 euro) at retail in europe, so i can't imagine that 40 gigs is anywhere near a 200 dollar price drop. If it does come out, it will mean more looses for sony but could be the only thing that saves them this christmas. I think hard-drive space is an awful lot cheaper than people imagine.
Also 40gigs or 80gigs or even 120gigs is absolutely pennys in terms of hard-drive space when I consider hard-drives for pc's. They need to think of somehow incorperating external hard-drives which would make a lot of sense, if they could stop piracy of games.







