They will most likely lower the price of the 700 when the next model comes out (800? 705? who knows?), and historically, Sony has brought out a new Reader about each year in November.
However, with the economy the way it is, and with Sony having taken such heavy losses, one can only conjecture as to when any new reader will appear, or even if a new reader will ever appear.
Sony vowed to keep the 505 current when they released the 700, so that they now have two pricing tiers, so my guess as to how low the 700 price will drop is "not very much." If they upgrade the 505 to the 510 and the 700 to the 705, then any price drop on the 700 will be just low enough to blow out remaining stock at the end after they see how well any new model does.
They may not bring out a 510, though. They may have known that the touch-screen muddied the clarity of the screen and that many wouldn't be happy with it, which would explain their keeping the 505 on the market. When the have resolved the touch-screen/crystal-clear-display issue, they may simply bring that out as a replacement for the 700, abandoning the 500-family totally.
My guesstimate would be "not before November 2009, and quite likely not even then."
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