MS will drop price when they see either Sony dropping price or softening of the market for Kinect. When they do this is what I suspect.
I suspect PS3 will only drop $50.
HDD version of 360 will sell for $249.99. HDD size will be adjusted this year to be most cost effective size drive.
Flash version of 360 will drop to $149.99. Memory size could also be adjusted to 8GB based on cost effectiveness.
Kinect will drop to $99.
Kinect bundle with flash 360 will drop to $224.99.
Kinect bundle with HDD version of 360 will drop to $324.99.
Its libraries that sell systems not a single game.