Considering Apple had already dropped prices for its Time Capsule wireless networked drives, an Apple TV price drop doesn't come as much of a surprise. On top of that, Microsoft is on the verge of updating the Xbox 360 to stream "instant-on" 1080p movies using Zune video technology, so Apple needs to do something to invigorate its little white video box in the face of increasing competition from plenty of players, including Roku.
Of course, after recently hearing Apple executive Phil Schiller talk about how US$199 is a "magic price point" for the iPod Touch, you have to wonder why Apple just didn't hit US$199 with Apple TV (I routinely beg Apple reps to drop the price to US$199 in meetings).
Alas, in due time. However, before we see that price point, we expect to see a higher capacity, more expensive model in the not so distant future.