If you look at it from a strictly gaming console POV, then it's very much overpriced, but when you look at it from a BluRay player perspective, then it's actually quite cheap, with most of the units coming out at $800+. Sony is just now releasing a stand-alone $600 BluRay Player, so even next to that, the PS3 is a steal.
Don't think I'm being a Sony apologist though. I won't be buying a PS3 anytime soon thanks to how expensive it is. It's just not in the budget right now, and even if it was, I'd be hard-pressed justifying the purchase since the 360 and Wii are serving their purposes quite well. The problem isn't the price of the technology, it's the fact that Sony decided to bundle their overpriced proprietary disc format with that technology, effectively cutting off a good many of their customer base. Sony assumed that their customers would just bite the bullet and pay an extra $200 for a feature most neither need nor want, just because they "HAD TO HAVE IT!" It looks like they assumed wrong...