According to the same informant for ARSTechnica who has leaked accurate info thus far on

The HDMI enabled 360
The wired Rock-Band controllers
The Forza/Marvel 360 bundle
The $400 PS3 SKU
The $50 360 price drops
The core/premium HDMI enabled 360s

The new PS3 is a 120-160GB model with a DualShock controller bundled.

" Sony is, in fact, phasing out the 80GB PS3. Sony is going to stay with the two-SKU approach though, and the prices look to stay the same," the mole told me. I heard sirens in the background, and the mole seemed nervous. " The Spiderman 3 pack-in will disappear as well once the 80GB unit is gone. In order to maintain a similar value proposition to the 80GB/Spiderman 3 bundle, I expect to see a storage increase to 120 or 160GB at the same price point, plus the new Dual-Shock 3 controller.

ARSTechnica

What is sony thinking? We want price drops not larger HDDs.

Hard disks are quite cheap these days. Sony can increase the perception of value by offering a bigger HDD at the same price point and rake in a growing profit margin (or at least a smaller loss). Like most moves of this kind, it doesn' t matter that there' s a minority of tech savvy people who recognize it for the cop out that it really is... they' re banking that a bunch of people who don' t know any better will think they' re really getting a great deal all of a sudden.

What is sony thinking? We want price drops not larger HDDs.

I heard that.

Hard disks are quite cheap these days. Sony can increase the perception of value by offering a bigger HDD at the same price point and rake in a growing profit margin (or at least a smaller loss). Like most moves of this kind, it doesn' t matter that there' s a minority of tech savvy people who recognize it for the cop out that it really is... they' re banking that a bunch of people who don' t know any better will think they' re really getting a great deal all of a sudden.

Very true. 60gb(55gb actually) is fairly reasonable seeing as I have put many avi' s, mp3' s, and downloaded games, demos and videos on my ps3 and have 5gb left.

That said, the 20gb(really 13gb) HD on the 360 is waaaaaaaaaaaay too small IMO. Being forced to delete not only demos and videos but XBL games is just ridiculous in this day and age. 20gb is the size of the HD I had on my computer back in 1997.

Someday i' ll delete one of the many demos i' ve downloaded.... someday.

It' s pretty clear that the sweet-spot in console pricing is around $200, and it' s going to take far more component cost-reduction to get to that point. This generation especially, Sony' s focused more on " sweetening the deal" than discount pricing anyhow.