The issue with Arcade / Core is:
a) the supposed low entry they give seems false as MS uses Live, DLC so much as being main drivers for the console (and therefore themselves essentially making the Core/Arcade seem like a cheap / subpar choice)
b) the cost of ugrading with HDD seems too high if you decide you want DLC, etc. so they seem like the wrong entry choice unless you know you're not going to want to upgrade.
c) they represent a pretty obvious steath approach where once you commit to 360 you will very likely ugrade and sink more money into the console - that's not a good consumer response to generate
Ultimately I think whatever the price these units will not compete well with the Wii - and ultimately that's the problem with them. They're not really wanted by those who will buy a Wii (cheaper or not) as the games the Wii buyers want are on the Wii. Conversely if you look at core 360 owner they are going to want DLC for map packs, games, etc and will view the Core/Arcade as 'the option for idiots'.
If I was MS I'd quietly drop them from the range if they don't sell when price is same as Wii - and I doubt they will but you never know.
Try to be reasonable... its easier than you think...
