[quote name='feelgoodinc']M$ has had consoles available for $100 and $200 for quite some time. I don't think they need to step anything up.[/QUOTE]
I agree with the second point, but when did they have consoles available for $100? The cheapest I've ever seen was 129.99, but i don't think those were price cuts from MS, but rather big box retailers.
Further to your second point, I agree that Microsoft still has a competitive offering.
4 GB Xbox 199.99
160gb PS3 249.99
250 GB Xbox 299.99
Just from a storage view, each one is reasonably priced in comparison to each other (arguably, not as much for the 4 gb). Outside of that it's a matter of extra features (psn/xbl, blu-ray, etc).
That being said, MS has been bragging about being the best selling home console month after month, so if they want to keep those claims coming, a price cut will certainly help.