I haven't read everyones posts, but after quickly scrolling past them, I think most are not very well thought, and just to defend Nintendo.
Just to make things completly clear (as a number of people have kind of already mentioned), the Nintendo Wii is AUD $399 in Australia. Although I'm not a fan of Sony, I actually tend to agree with what has been said. You see, a non gamer would most likely use the machine on social occasions, so that means it would be quite likely they would want to purchase another controller, and maybe even another game, and this adds up.
I can't comment on Sony's solutions/efforts towards social gaming, as I have no idea about how much a PSTwo, those EyeToy's or them DancePad's or whatever they have are worth.
As for a gamer, I can't say it's to expensive, as I think most gamers are quite happy with the price (although I would have hoped it would be slightly cheaper, but that's just me)... well some gamers may look at the PS3 as an alternative, which is alot more expensive. But you must remember Nintendo is also targeting non gamers... and I don't think they are too concerned with the revolutions/generations of gaming, they just want something for easy entertainment/fun or whatever... I don't think they would look at the PS3 as an alternative, but rather the PSTwo + Addons. So yea, I myself can hardly imagine a non gamer spending AUD $500 or whatever on such a thing? I dunno, I could be completly wrong, but time will tell.
Finally, I do think that the Nintendo Wii will do better than PS3, but I dunno.