It was predicated by many analyst’s that the PSP will have a price drop to 149.99 in time for the holidays. This statement was then denied by Sony but now it looks like they are reconsidering this as countless PSP's are literally stockpiling in their warehouses. Quite a few major retailers are also saying that the PSP to DS sales ratio is getting pitiful, and a few major publishers are putting the pressure on Sony to find a way to sell more handhelds. Sony tried to release PSP’s in “limited editions” and in different colors, but that didn’t pull in as many sales as they would have liked. (Although it has helped them a bit.)
Currently the plan is to lower the PSP to 179.99 and maybe pack in a free game. Another option is sell it for 199.99 but throw in 2 free games. These games would obviously be old cheapies but its still better then paying full price. This would be in time for(or just after) the holiday season as predicted before. They will also be once again lowering the price of their PS2 to 99.99.
This is all obviously subject to change, but so far it looks like at least some of these things will go through. (Unless PSP sales kick into overdrive soon.)