What are you talking about? They're offering year-old hardware now and only taking $100 off the price. Given the advancements in the iPad 3 and the costs involved in it, it wouldn't surprise me at all if Apple is making more money on the $400 iPad 2 than they are the $500 iPad 3. The screen alone eats up a good portion of that $100 price difference.
That seems to be the case.
To go along with that, the original A5 SoC in the iPad also had a die shrink from 45nm when the iPad 2 first released to 32nm when the "new" iPad was released. Since it is merely a die shrink and performance doesn't need to increase the smaller A5 SoC costs less to produce which offsets some of that $100 price reduction. Of course the consumer also benefits if they are buying the iPad 2 with the new A5 SoC as the newer version runs cooler and also gets better battery life than the older 45nm iPad 2.
"The gains themselves are significant. We measured a 15% increase in our web browsing battery life, a nearly 30% increase in gaming battery life and an 18% increase in video playback battery life. Although Apple hasn't revised its battery life specs, the iPad 2,4 definitely lasts longer on a single charge than the original iPad 2."