I have a 20gb HD, and I would absolutely love a 360 with 200-250GB. I probably DL about... a show a week or so on xbox live if I don't have time to catch it on TV. I DL game demos as well. My 20gb filled up right away, because once I buy a show, I'd like to keep it around. And with the ability to install games on the HD to improve load times, that space becomes all that much more useful...

...sony would have to file for chapter 11

Not going to happen, its only gonna drop $50

Well considering that Sony is RAISING prices on some of it's other products ( http://kotaku.com/5101733/sony-raises-prices-on-products-ps3-unaffected ) I doubt we'll see a lower price on the PS3 anytime soon.

"All three home consoles are built in Asia. Two of the three platform holders are based in Asia. So what happens when Western currencies start dropping like a stone, courtesy of the "economic crisis"?

We face the prospect of prices being jacked up to compensate. In Britain this week, such a move has already taken place, Sony informing customers that they'll be raising the price on a range of appliances and products, from laptops to cameras to flat-screen TVs."

An epic win? This isn't taking into account 3 things:

1) Half of all 360 sales are Pro/Elite versions, which aren't that far below the price of a PS3.

2) Microsoft could easily respond with a price cut to keep the Elite priced competitively against the PS3, which having the other versions say notably cheaper. The 360 is notably less expensive to produce than the PS3, so MS can always keep their price lower, while losing less money than Sony.

3) People have short memories. The last generation is over. The era of everyone buying Playstation because it's Playstation is in the past. Every day that Sony doesn't drop the price substantially, and people buy and love 360's, Sony permanently loses former PS2 owners in this generation.
 And as much as people think $299 is the magic price to turn things around, the magic price point, as history clearly shows, is $199. Will the PS3 be there anytime soon? No.

This isn't going to happen... but I'll give you reasons that Microsoft won't have to worry.

1. Price: The 360 is cheaper and more of an impulse buy than the PS3. (To be honest the cheapest 360 brings in a lot of sales around here.)

2. BR players are cheaper now. Basically it's like this... Some people would buy a PS3 for Blue Ray player and Video Game player both but with Blue Ray players going down right now... If you get lucky at some stores you can walk out with a Blu Ray and a 360 for about/ or cheaper than a PS3. Supposedly at the beg. of next year you might not have to be so lucky.

3. Advertisements: Hands down this is possibly the worst area for PS3. Seriously if you knew nothing or very little about a system and you watched the advertisements. You'd see two things. (At least around here) You'd see a commercial with a bunch of buildings getting painted and a bunch of games you know nothing about(Or you know about them and just aren't very interested. Not everyone liked/loved the Metal Gear Solid series) which is more distraction than anything or you'll see a commercial with a bunch of screen shots, videos, trailers from an actual game... and then the Xbox 360 comes on for a price tag of 199.99. I promise you the latter looks more interesting and is more of a seller than the former.

If Sony pulls the trigger on $299/299EUR, it's all over - Nintendo and Sony romp for the rest of this generation, while Microsoft struggles on as distant third. That price point, adjusted for the rate of inflation, is what $199 was for the PS2/Gamecube/Xbox generation - the point where the mass market buys in. Price cuts aren't linear in their effects, they're more like an exponential curve - for example, sales at $500 per console might be 100K/month, sales at $400 are 200K/month and sales at $300 can go as high as 400K/month.

None of which means that people shouldn't be buying and playing any particular console. They are all wonderful machines, with insanely fun games. It's just that Microsoft's billions have not bought the capacity to be a full-fledged hardware producer.

There has not been 50% inflation since the PS2 $199 price point.

edit - unless you live in an unstable African country. 

If PS3 dropped to 299.99 early next year.....

Sony will go bankrupt for sure they are on the edge for a few years already

M$ will be dead, sales of x360 will be negative, people will be bringing back x360 to stores.)))

Anyway, let`s wait and see, what the point, IF and WHAT.