Apple will hit that lower price point... when they come out with the next gen of the iPad mini... when the next gen comes out, they will prob start selling the 1st gen at $249... they just have to be careful in their pricing model to not to cannibalize their other products (i.e. the iPod Touch)... I'm sure their margins are much better on the Touch than on the iPad Mini.. so they don't want to loose too many of those sales...
Good point, I could see them doing that to get the price down somewhat. That also allows them to move around the iPod Touch prices if possible or if need be.
Of course the iPad Mini will cannibalize some of their other products, but that always happens. Look at the MacBook Air, I won't lie, I did not think that would be as big of a hit as it is.
Plus, the iPhone cannibalizes the iPod Touch more than anything, especially now that they offer older iPhone's for free and for $100 on contract. As the continue to offer the iPhone on additional carriers, this will continue to get worse.
Back to the Mini, if I was in the market for an iPod Touch, I would probably still not be interested in the iPad Mini. From my experience when I was at Best Buy while I was in college, the typical iPod Touch customer fell into one or more of a few categories:
1 - Android User but prefers iTunes/iPod, this also includes customers with T-Mobile, US Cellular, etc that want and iPhone, but it is not available to them through their carrier.
2 - Parent buying their kid an iPod Touch. For ex: my younger cousin was given a "dumb" phone for calls/texts and given an iPod Touch to go with it... Instead of getting an iPhone.
3 - Someone who wants an iPhone, but doesnt want to pay for a data plan, or who doesn't need it. Or they just want an iPod.
Most of them wanted something small and portable still, considering a tablet too large or so it seemed at least. I never had anyone tell me: "I wanted an iPad, but its too expensive so I decided to get an iPod Touch"
Based off that, I do not think it will kill the iPod Touch as bad as some people think it might, but I easily could be wrong. I left Best Buy a year ago as the tablet market was still growing.