A couple of things to remember about all this:
1.) The 60 gig version is in abundance in Sony's warehouses. Back in April, they shut down an entire plant that was manufacturing the model due to a backup in the inventory pipeline (i.e. they were making way more than they could sell). The best industry guesses put Sony with over 900,000 systems to sell (and that could easily be a low number). Sony has been averaging 30,000 systems a month sales in the U.S. That number "doubled" according to the asshat CEO after the anounced "price drop" - )
While I doubt that number of sales stays at that doubled spec for each month from now on, lets assume it does. 900,000 divided by 60,000 = a 15 month supply of 499 systems. In all honesty, I really think this was always intended as a price reduction to reduce stock. It's just that it would be supremely embarrassing to say "yeah, we got enough 60 gigs to last over a year, so we are stopping production to clean out our inventories." Of course, their official answer made them look bad as well, so they would have probably been better off telling the truth.
2.) I agree that the PS3 is not going to "win" this generation. However, lets be honest people, neither is the 360. Nintendo has already beaten them both. What do parents want the most when shopping for their children? Cheap, quality products and, lately, a means to encourage exercise in their children. Well, they get both with the Wii. 360 and PS3 can only sit back and fight over 2nd place. Well, unless you are a Sony/MS executive. Then you live in a fantasy world where you can say things such as "we are not competing with the Wii. It is a niche item, not a complete entertainment property like ours." Translation - we can't beat them, so we aren't going to let them play. Sorry idiot execs, it don't work like that
3.) Sony is not going to disappear any time soon. They did a smart thing by keeping the exclusive agreements for MGS4 and FF13. They also have a few other exclusive in the pipeline that look good. MGS4 WILL sell systems to the action crowd, while next year FF13 WILL sell systems to the RPG crowd. So, by next summer, I truly believe that the PS3 and 360 will be neck and neck. Doesn't mean that Sony can beat them for second, but it will be a whole lot closer than we ever imagined.
4.) I do think the current promotions (499 with 5 to 6 free movies) will sell systems. If you intend to use your PS3 for Blu-Ray, it's a solid deal.
