The
Pandigital Novel is an actual 7" Android tablet for $199 (estimated $180 retail). It is clearly designed to be an ebook reader with a few extras, and is therefore likely to be underpowered as a general tablet. I don't doubt that $125-$150 retail is possible later this year for a functional but minimal device.
It is less clear to me that a true Android based iPad competitor can be sold for much less than the iPad. Apple seems to be taking lower margins than usual, at least at the entry level.