Ok, a price drop is coming for sure. The July 14th circulars from Circuit City and Best Buy are showing the reduced price.
Now, here is a tidbit to make things even MORE confusing/annoying: an uncomfirmed 60GB version of the 360 will be released sometime soon.
Some people are speculating that this "price drop" is an attempt to clear stock of the 20GB models to make room for the 60GB models that'll come in at $350. Which would also mean that the Arcade and Elite systems may not receive a price drop.
MS better make some things clear at E3 or the uncertainty will keep a lot of people away.