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MP3 players are a little different - the major cost difference between models is the amount of memory, and price/size has declined rapidly over the past few years. You can easily find small (2GB) players with a limited or no screen for $20 or less. They've replaced the music players of yesteryear with cheaper, more functional devices.
With ereaders the major cost is the screen. Mass production should help reduce costs per screen, but screen manufacturing has to become cheaper for the cost of ebook readers to dramatically drop.
I'd agree with DMaul though, that the price drop will happen way before dead tree books disappear. I have faith in capitalist ingenuity!
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