I've been in retail a lot, and I can tell you, this is probably a combination of Target and Sony's permission to have this exclusive deal. Here's what's happening:
Sony knows that they have a required price drop from third party developers coming soon. They can't afford to lose focused developing from big developers when Microsoft pushed most developers away from them already and the Wii is knocking on the back door.
So in desperation to move units while remaining profitable per hardware sale, they're letting Target bundle overstocked greatest hits games with the 80gb unit to try to push sales before the price drop happens.
In my opinion, I think Sony's best move so far would be to make one sku with "enough to get started". Bundle it with one game, one blu-ray movie, an HDMI cable and keep the 80gb hard drive or keep the 120gb hard drive.
My strongest ability as a salesmen came from not having customers have to decide "between" a cheaper or more expensive model. The more hesitation, the more likely they are to walk away from either feeling like they need to save up more for the better model, or going home to think about whether it's worth the extra $100 or not. If you give them one SKU that's bundled, there's no hard decision to make. The only decision is, "Do I want a PS3 or not?" For one, you give them the materials they need to have an HD experience out of the box, you give them a Bluray movie to see how good HD movies look and you give them a game to play.
That's the BEST way to stimulate third party purchases. Most people I know don't even bother with Bluray because they've never seen one before and it's too hard to get people to try something for the first time. Everyone I know that got the Spiderman 3 bundle, has at least 2-3 more Blurays and rents them on weekends because they love the HD look.
I think the bundle is an okay idea, but not at $400. That's still a lot of money in today's economy.
An 80gb PS3 with BC, a 4' HDMI cable, Resistance and I Am Legend or something on Bluray, for $350, would sell like hotcakes.