The fact that sony is telegraphing their punches makes it easy for MS to respond. to put this simply:

PS3 is like a kid saying exactly which move his pikachu is going to use
MS is the other kid knowing exactly how to counter with his charmander.
Wii is sitting back because he's mewtwo and doesn't care what happens because he's untouchable.
:D

You should not be afraid unless you are working for Microsoft XBox department.

I think that recent data shows that 360 should be more worried about dealing with the PS2 as the cheapskates seem to heading that way now...

well ps3 slim would still be probably bigger than 360. and i really doubt it would affect 360 sales much since we won't see price cut - if sony would announce slim version it would end up with the same 400$ price for at least few months considering Sonys financial state.

A slim is probably the last thing they are thinking about, if they can't shift enough hardware now they know that investing even more billions in the slim is not going to turn people who have snubbed the PS3 just because they make it look different.

And with MS and the Valhalla up their sleeve (merged the CPU, GPU on one chip) they are probably every bit as ready as Sony to slim down but as with Sony it's a risk probably not worth taking.

Considering the 360 with the power brick is larger than the ps3 and the 360 runs hotter i think both will probably arrive at roughly the same time but it will have a bigger impact on the ps3 which is considered more of an AV devise than a console compared to the 360.