It amazes me how much people dont understand HDD pricing. Certainly very shortly MS will discontinue 120GB Elites. The simple reason is it is now cheaper to produce a 250GB 360 than it does to create a 250GB 360.
With that in mind it is perfectly logical and fiscally sound to expect that MS will be able to offer a reduce cost (slim or no slim) 360 this fall with a 250GB HDD and Natal included for $299.99. It could even be less. It will be 2 years between retail price reductions on the core 360 (The core 360 being all components besides the HDD). Components have dropped in price and the combined CPU/GPU will really help reduce costs to an even greater extent.
Its libraries that sell systems not a single game.







