On the question of whether or not Microsoft will be dropping the price of the Xbox 360 in the near future as the launch date of the PS3 approaches, the answer is a solid "negative". Microsoft has made a statement, contrary to earlier rumors about a $100 price drop.
"We have no plans to make any price adjustment. The last couple of days have reinforced the fact that we have a great value proposition, giving consumers choice, thanks to the core system. We're not forcing the consumer down a route with HD playback. We certainly don't think it's necessary to make any changes to the current price point."
How this will impact sales of the Xbox 360 is unknown, but typically people who wait this long after a launch to buy a console are waiting for just that, a price drop. Eventually, it has to come down, and maybe competing sales from the PS3 will change Microsoft's tune.