Sony Memory Sticks are expensive period. Maybe not to Sony, but they'll think twice before dropping the price of their memory. Pesonally, it's the worse type of flash memory availabe. SD cards are far cheaper (to consumers) and has more memory to boot.
Anyways, I'm not surprised. It doesn't have much going for it. Having a video and audio feature that revolve around you buying a horribly expensive memory stick or mini-disk dvd's that can't be used for anything else, is a huge flaw that everyone should of foreseen. It'll only sell for those that already have a horribly expensive memory stick, or those that want games. I don't think anyone would want it other wise, if they knew that they'd have to pay $100-$200 more to play music and photos and $25 (just a geuss) for priorety dvd's. And 100-200 dollars worth in memory stick, is about......200-300 songs, which isn't worth it at all and neither are dvd's.
Again, it'll come down to games, or those who have a memory stick and want to take their images/music on the go, or both.
The PSP isn't really that economical at all, and I think that fact is going to hender sales.