Seems like it might happen. Sony Computer Entertainment guy, Ken Kutaragi keeps saying Sony fans should put another mortgage on the house, sell some organs to the black market, blood and semen (not together of course!), basicly- Sony expects to sell the Console at a Big price.

This keeps analysts thinking Microsoft may increase the price of there system in order to reduce the deficite they would get for every console sold.
I personally think throwing the cheaper system out on the market would make the system much more appealing to customers who want a taste of the next generation. But since Microsoft is the first up to the plate this time around, who knows what road they will take.