Deep down inside I would love a $199 console which focused on an OS over hardware so that there could be bi-yearly hardware releases to feature the latest and greatest tech for that price point.
Thing is, people don't like to buy new "systems" every year or two, aside from the cell phones. And that's mostly because cell phone companies subsidize the cost of a new phone provided you sign a contract with them.
And for $200 you're probably not gonna get anything that's "latest and greatest." Think how long it took for the PS3 to drop its price from $500/$600 to where it is today. Price of production does decrease but it takes years, and I doubt that a small company can make the same type of progress when it comes to efficiency of production.
For $200 most people will just settle for a Nexus/iPad mini device that'll do most everything this Ouya thing can.