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How much does wifi cost?  Because it doesn't sound like the subtraction of wifi and a hdd (hdds would be super cheap for Sony to provide in bulk for PS3), and the addition of a vastly superior blu-ray drive would itself save them much money.  Doesn't seem like they could get down to Wii prices, does it?  All the other listed changes to the motherboard, etc, may provide a cost savings, but wouldn't require elimination of hdd.

I really can't imagine a machine that's not online capable, in this day and age, and given that Sony sees PSN as one of the most valuable components of the Playstation business, and one that needs to be grown.