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I'm guessing MS will keep the 360 Arcade at $199 unless the PS3 Slim stays well above 360 sales until mid-November.  MS probably hoped having the high-end 360 in price-parity with the PS3 Slim would have a bigger off-set effect.

If PS3 sales don't ease up--and I don't see them dropping below 200k per week until after Christmas--I believe MS will drop the Arcade price to $149 before December.  They have the cash to do it, and I can't think of any hardware moving games coming out on the 360 before next year.