Why in the world would they do that? The iPod Touch starts at $199, why would this device start at the same price? It would kill iPod Touch sales, and I'm pretty sure the margins on the iPod Touch are higher than they would be on a similar device with a larger footprint so they'd be shooting themselves in the foot replacing higher margins with smaller ones, and for what reason would they do that? It makes no sense.
Expect prices to start closer to (if not over) $300. This is Apple, when was the last time you heard someone say, "don't buy that device from them, Apple sells the same product for the same price or cheaper"?