I think the high prices are because we're still pretty early in this generation. The PS3 and Wii have only been out a year and a half. After this year, prices are gonna fall like a rock because of the glut of great games that'll be out.
This probably isn't a great example, but I look at the PSP three years ago when it released and games cost $50 each and they weren't even that briliant. Fast forward to the present and just last weekend I went to Gamestop and bought 3 brand new games God of War, FF7, and Patapon for $100. You can even make the argument that these games are among the ten best that have released on any platform in 2008 so far.
Then again, the fact I can get those 3 games for less than the price of 2 brand new PS360 games goes to show just how bad the console prices are.
My Top 5:
Shadow of the Colossus, Metal Gear Solid 3, Shenmue, Skies of Arcadia, Chrono Trigger
My 2 nex-gen systems: PS3 
and Wii 
Prediction Aug '08: We see the PSP2 released fall '09. Graphically, it's basically the same as the current system. UMD drive ditched and replaced by 4-8gb on board flash memory. Other upgrades: 2nd analog nub, touchscreen, blutooth, motion sensor. Design: Flip-style or slider. Size: Think Iphone. Cost: $199. Will be profitable on day 1.
