I think you missed the part where the $499 60gb PS3 sold well.
People just don't want to pay $599/£430 upfront. Most shops here already bundle 2 games with the system, normally Motorstorm/Resistance and a cheaper game.
My point was, if you buy a 499$ PS3 without nothing... you HAVE to buy games for it that is just a given, most people will buy at least 2 games initially and tons more in the long run...
So tell me why a $499 + 2 $60 games (total $619) is a better value than a 599$ PS3 with 2 games AND a controller, things you just NEED for your PlayStation 3 and were gonna buy anyway? It would just mean people are in a false pretense that Sony's price drop was temporary.
But if stores were already bundling games with the system then yes, the whole $599 upfront thing would make sense. (I bold this in an attempt to prevent going a step backwards in the argument)
To be honest I've always thought people were really pushing the whole "PS3 overpriced" thing out of the limit, especially considering that for most people who complain, the real issue is not an actual economic problem but a matter of principles where they feel its an outrage to pay X amount for a certain object even if it isn't really overpriced or out of their price range.
To me, the real problem of the PS3 is that it doesn't have too many games that guarantee a purchase... that is it, if the PS3 had Halo 3, Grand Theft Auto IV and Metal Gear Solid 4 as exclusives to buy right now then they would be flying of shelves and no one would be complaining about the price tag.
It is a fact that human beings can never be truly satisfied.