It's not returning to normal (Nintendo wished!) and it's not dying. It's shrinking and by how much will probabaly be visible only next generation.
As other posts show, 3DS is both a success and a reason to fear (lowest shipments in a long time, as Soundwave mentioned) bad days ahead.
Could Nintendo sell more if they cut the price by 50$? Most likely, yes. But Nintendo is not in a position to cut prices now and probably won't be next gen aswell.
The market shrunk a lot for price cuts to make platforms really expand their userbase; You cut prices and you risk losing profits in the long run.
If it is possible, i would try and bring the Android OS to the next handheld.
Giving parents the best of both worlds, would be more appealing than a handheld at 199, with just Nintendo, LEGO and japanese games. Add to that Android games and you get, for that price, a really good alternative for a tablet.
