People are willing to pay $199.99 for the 3DS, in fact we know the more expensive 3DS XL model sells better than the cheaper 3DS models.
People weren't hot on a $250 3DS at launch because Nintendo launched it with Nintendogs as the main game for like the first 5 months, not understanding that the casual audience had sold them out for the iPhone.
So it's not really a surprise that they didn't have a good post launch with the 3DS.
3DS was also fairly outdated even at launch it looked like a souped up PSP with a 3D screen gimmick that was kind of a love it or hate it type thing. Some people liked the 3D, others didn't, and even if you liked it after 5 minutes your eyes adjust to the effect so that it doesn't seem like anything special anyway.
I think Nintendo could sell the next handheld at $229-$249 if they really want to *if* they have a good software library at launch and post launch and the value proposition is there for the consumer -- ie: the hardware is relatively of good tech. If it's a big deal dropping down to $199.99 wouldn't be the end of the world.
