I think that $400 is the breaking point for a console now, since the jump in graphics isn't going to be as dramatic as previous generations.
HDTVs running 1080p are the standard now, and it will be nearly another generation before we see new TV with higher resolution his the common (read affordable) market.
GPUs that can run 1080p aren't costly, so really the bulk of the new features will be in HD space and RAM increases. Sony already is running an 8 core processor, which is above normal even by today's specs.
I can't see them, in the current market value, needing to spend more than $300 per unit to boost RAM and HD space. They should be able to offer the PS4 at $400, to keep it viable against the competitors.

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