The price point is a shot right at the Kindle Fire, especially being a 7" tablet. I'd pick this up in a heartbeat over the Kindle Fire at the same price, even with just the $200 / 8GB config.
My Motorola Photon is still sitting on Gingerbread and is supposed to get ICS in Q3 of this year. I'm due for an upgrade on August 1st and with the horrible issues I've had with it, I'm leery to move to Android for my phone. This may take care of the concerns of tossing all the Android apps aside that I've picked up for my Photon, assuming ICS doesn't want to work well on my TouchPad when I work to install it.
$200 is a nice entry point for a Google-branded device and I think it'll give both Apple and Amazon some pause. Would have been nicer for Tegra 3 @ $250, though Asus will take care of that shortly.