Last time they dropped the price of the current device it was a very short time before a new reader, the K2, was announced and released.
At $259 they have set a new price point for a lot of people. So many just want it easy to buy books directly on their reader and could care less who store it comes from...and am willing to suggest even more who are on the bubble for a 6" (or even 5") device are going to look at the small price difference of the K2 compared to a 5" device with peeling paint (PAINT FOR GAWDS SAKES!!) for $199 and be willing to pay for the simplicity of not needing their computer in the mix.
As of now I see many will not pay anything like $200 for a 5" device unless the device offers some substantial differences that the AVERAGE consumer can appreciate. Experienced users are willing to dance around quirks but average users...not a chance.
And oh yeah, so much for the FUD from the marketing wonks about increasing cost of eink displays...
Nice to see the bar raised due to nothing more than a price decrease.
And YES, I get it that a 5" device is worth the "compactness"...and yeah, I dunna like the K2 anymore than my K1 so another Kindle is not going to be on my wishlist...a Pocketbook 360 would be nifty though...