Sony doesn't plan to offer reduced pricing on the PSP for the holidays, despite some rumors to the contrary. Originally, we heard the PSP would be cut to around $150, a significant drop that puts the device in the price range of many more people. Typically, the ideal time to slash a price is just before the major shopping seasons. Sony, however, doesn't seem that necessary:

"Currently we have no plans to cut the price of the PSP at this time," was the company line given by a Sony UK spokesman to in response. But rather than cut the price of the PSP, it is widely predicted that Sony will instead further trim the price of the venerable PlayStation 2 just in time for Christmas.
Of course, while Sony does dictate the price of the unit as it leaves their manufacturing facilities, the retailers themselves can always pull tricky stuff if they wish. If you're lucky, a store may discount the PSP just because they want to lure more people in. Don't count on it though.