With E3 just about ready to start, whats going to happen?  Who will be the winners and losers from this years event?

Microsoft

Well, MS has started early again, by announcing a $50 pricedrop for the 20Gb model.  Effectively bringing it in below the Wii, but it is now apparent, that this is just to clear the stock of 20Gb models as a new 60Gb model will be introduced at the original 20Gb price mark once the 20Gb's are all sold.  So this is a slight positive in the short term at least.

So what software will they be showing off?  Well the "big" games that we know of are Gears 2, Fable 2, Banjo and Too Human.  All of these games are due out in the 2nd half of this year.  My thoughts would be that Gears 2 is the "big" game for MS.  Why have they shown so much of it so far though?  I'm not sure.  Too Human has been getting panned over the last few weeks and looks as if, it isn't going to be the huge game that's been in development for near 10 years after all.  Fable 2, well MS, need some serious WOW factor with this game.  Not much has been seen, so it really needs to be able to turn heads.  And then Banjo.  Are we that bothered?  There is also the news that MS has secured a timed exclusive of Rock Band 2.  So expect a reasonably big push of this information.

What else do they have?  Well there really isn't much information coming out, so who knows what MS have up their sleeves for 2009.  Bungie's next game?  Rare's next game after Banjo?

All in all, it's not looking too impressive from Microsoft this year, but maybe, just maybe they may pull a few titles out of the bag...and don't forget that it's likely they will demonstrate a new look dashboard as well as their version of Home.

Nintendo

What are they doing?  There must be some big games in development and these will more than likely be introduced this week.  I can't really say much more than that.  They will have a good show, they normally do, but it will all depend on these mystery titles whether its a great show or not.  Oh and no price drops either.

Sony

Well firstly, there will not be a price drop and IMHO, they don't need it at the moment.  What they will introduce is a replacement for the 40Gb model with just a larger hard disk...maybe 80Gb for the same money.

Game wise, Resistance 2 and LittleBigPlanet are the 2 "big" games for Sony this year, these games will be shown quite a bit.  As well as a small showing of Killzone 2 (new environment), the first GOW3 trailer (hopefully some in game graphics though) and quite possibly a trailer for Team Ico's new epic.  On top of this, they will show more of Home and actually date it as well.  Will there be a trailer for FFXIII?  Well there is a chance.  Also expect a big showing of Motorstorm 2 and some snippets from inFamous as well.

Overall

In my opinion, Microsoft will be the weakest of the 3 this year.  Sony is going into E3 this year with the strongest lineup, but will Nintendo nip in there and grab the limelight at the end?

Imo its between nintendo and sony. Nintendo has the advantage of being very secretive, and most of sony's heavy hitters seemed to be announced already. Nintendo still has yet to announce their lineup for the second half of this year, and I doubt they won't announce anything. Not to mention that they have mentioned a big title for christmas, and since animal crossing was already announced I could see it something even bigger.(Which is really big). Sony does have alot of Ips though that could win them. Examples being God of War, Ico Projects, Jak, etc. Nintendo has Zelda,Kid Icarus, Animal Crossing, Disaster Day of Crisis, etc. Microsoft seems like they are trying to copy Nintendo's success, but I see that as going to be a failure. Plus alot of their stuff is already leaked such as that Action-Adventure game and Lips. I could see some new announcements, but I think the show will revolve around Nintendo and Sony more.

Sony should win again this year. I don't think we'll see much from Nintendo and Microsoft will most likely focus on the casual side of gaming in addition to a decent lineup of core titles.

Nintendo will probably drop some crazy shit on us like F-Zero Wii, Pikmin 3, Kid Icarus Wii, Zelda Wii, a buncha WiiWare shit, good games actually coming out on the Virtual Console and there are like a million other things they could do.

This year's E3 is shady in my eyes.

Animal Crossing

Microsoft has the most to prove, and therefore has the best chance to succeed.

Jak 4 will shutdown E3!! Final Fantasy XIII will shutdown E3!! Uncharted II will shutdown E3!! Heavy Rain will shutdown E3!! InFamous will shutdown E3!! Gran Turismo 5 will shutdown E3!!

Sony will do us loyalist proud.

Microsoft can't lose! xD They have Left 4 Dead.

If they don't drop something unexpectedly good, that is what they will be:

Left 4 Dead

As much as I disagree with you're sentiment, that was an uncharacteristically good call.