Sony's got some fight left in them yet.
If they can manage to coax developers to their side and produce a decent library of good games and sell this under the $300 mark, I can see them getting back into the ring. In my opinion, this device is leagues better than the 3DS. Nintendo's next generation console only brings 3D graphics to the table. The NGP brings a fucking powerhouse. The battery life is reported to be a tad smaller than the original PSP's, which isn't so bad considering it's delivering PS3-level graphics.
I hope that they slap a $250 price tag and push the competition level up to 11. Everyone will, no doubt label this as impossible, but Sony's known to price their new hardware lower than it costs them to produce it and recuperate some losses through software. It's very possible.
No major gaming system has been released for over three years, so we can't really get accurate comparisons on price. Keep in mind that Sony lost money through every sale of the $600 PS3 at launch, but is making money on each $300 PS3 Slim today. Prices drop.
If anything, I don't think Sony's stupid enough to price their handheld higher than their home console.