I see a lot of Sony-ers gleefully laughing their assess off at the ownage of the Xbots.
I wouldn't be so smug. Microsoft just did Sony a huge favor. Not only has Microsoft raised game pricing, they've also upped the price of initial hardware. Sony doesn't have to take the PR hit for this. Sony doesn't have to test the market. Sony can come in at a $100 higher price point and justify it with a next-gen DVD drive and the bragging rights to say they have the most powerful console. If you don't think Sony will exploit this to the tune of a $400-$500 console, you're beyond denial. The reason why Sony wins with this price announcement for Xbox 360 is because the market will have already been primed for higher console and game prices by the time PS3 gets to market. Mark your calendars because today is the day that the $299 console died.
As mentioned before, I don't know why anyone would buy the bare bones $299 console because you're gonna have to spend an additional $30-$40 just for some type of memory stick storage (unless the 360 lets you use your PC as storage over a network, and even the average consumer won't have this option). You would be much better off buying the $399 version and getting everything up front. The $299 console is really only there as a joke. A psychological filter for those people that say they refuse to pay more than $299 for a console. By the time that person gets to the cash register with his $299 Xbox360, and all the accessories that he needs, he might as well have purchased the $399 version.
I will say this in Microsoft's favor, at least they are bundling their system with some worthwhile accessories, unlike the PSP value pack, which gave you an additional $75 worth of crap that most people have sitting in the bottom of their closet because they had go out and buy better stuff than what came in the package.