It really depends on what features its got. The wireless penetration rate is increasing quite substantially, and if they can add some cool features like wireless + adhoc networking for local play it would be pretty awesome. It would absolutely crush in the college scene where you've got a high density of consoles in a particular area. Its especially useful to give peer pressure an edge in dragging people to buy an Xbox 360 to participate.
In general a $149 Arcade + $229-249 (shadow Premium from HDD upgrade) + $299 looks pretty solid overall to me. The people who need a cheaper price can always go for the Arcade + HDD upgrade option and the people who can't be bothered can get an Elite. I think its pretty good price stratification really between entry, entry+ and premium markets and it should help them keep their average sale price higher and sell more consoles at the same time.
Tease.
