The Xbox, PS2 and Gamecube are all now $199. The Xbox is probably the biggest value in terms of pure hardware. Microsoft is losing money on every sale, but are making it back in game sales. That was already the case when it was selling at $299-- now that they're only getting $199, it hurts that much more. According to the article, Sony has reached their break-even point with selling the PS2 hardware, so the price drop isn't a problem for them. Nintendo is going to stand firm for a while, but I expect they'll drop another $30-$50 by the holidays.
By the way-- you can thank me for this-- I bought an Xbox just over a week ago (Spider-Man made me do it).