Agreed and this will force a drop on the 360 as well, Possibly undercutting the Wii on the low end (arcade version). Thus possibly dropping the Wii to under $199..
In the end the consumer wins. I like this move.
The Wii should be discounted - it's the only system making a profit as it is, and if you can get a 360 for $199 or a PS3 for $299, paying $249 for a glorified toy (I own one and like it, but that's really what it is) seems a little crazy.