That's true, most casual gamers that want it probably aren't aware of the insane price just yet, and there are probably still enough people that can afford it.
I suppose we'll see how well it does this holiday season at that price (or rather, those prices) and see how soon the price drops come, if any. I'm sure Sony will be reluctant to drop the price if they're already losing lots of money on them as it is. Once again, it'll probably come down to the games ($650 Canadian might be worth it if there was a guarantee of a lot of good games), which is where the Wii comes in to show the world alternatives that are more fun. Though we keep saying Sony's screwing up, and they really are, the biggest problems for them are really the successes of the competition.