First off, I just want to say that I think the $600 sku is a very good deal for what you get. (PS3, Wifi, 60gig hdd, & Bluray player). Plus, Sony supports their hardware for 10 years. The thing is, most people cannot afford it!
At that price, the PS3 is not a mass-market device like the PSX and PS2 were. Its high end.
If MS is smart, they will drop the price of the X360 (both premium and core) by $100 today. They ate losses for years with Xbox and that merely helped them get their foot in the door. But now the situation is different. If they can drop the price another $100 they can bust the door wide open and the American market (and a large portion of the European market) is theirs. No doubt in my mind.
This pricing is almost as bad as when Nintendo stuck with cartridges. Sony has the third party support now, but if they can't move hardware like they need to after the first year or so (which they won't, not at this price) then it will dry up quickly. The gap between 360 and PS3 install bases in the US and Europe will be too big for the japanese third parties to ignore.
I'm still buying a PS3 at launch
but methinks Sony bit off more than they can chew this time.
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Also, about Tekken 6. I have no doubt that the final game will look much better. Remember the first time Namco showed Tekken for PS2? It looked nothing like the game we ended up getting for launch (TTT). It looked much worse.