I know plenty about the pricing of hardware. Smaller size doesn't always mean cheaper (or much cheaper of a price). Conversely, bigger doesn't always mean more expensive. By your logic, the 250gb version shouldn't be $50 more...but it is!

Your logic with the upgrade is flawed too. If I upgrade the hard drive in my PS3 myself, I get a larger hard drive in my PS3 and a smaller hard drive I can use in an external bay. If I pay Sony, I only get the convenience of them upgrading it for me to a smaller size than I'd probably want anyway. The crowd that would otherwise pay the $50 extra for the larger hard drive is the crowd that's probably going to put in a 500gb hard drive in anyway.

"How about a 60gb one for $250 instead?"

You know nothing about things related to pricing of hardware, do you? Smaller isn't always cheaper.

" I haven't even come close to filling my 20GB hard drive on my 360."

I assume you either never use your Xbox 360 or you don't install your games to your HDD or download any games/DLC, then? A 20GB Xbox 360 (which, in reality, is only like, 14Gbs) is filled after a couple of game installs and and few more recent downloadable games that aren't 50Mbs in size anymore, but closer or even bigger than 500Mbs. I filled my 20GB Xbox 360 the day I bought it. :/

Even my 60GB PS3 is always filled with demos, full PSN games, game installs, HD-videos, great quality music & tons of pictures. I imagine having a 250GB HDD is nice for people who use the Video Store a lot, have plenty of games that require/have the option for installation and generally put a lot of s*** to their PS3's hard drive.

" The people who want more storage space are going to buy the cheapest PS3 and upgrade the hard drive themselves."

Uhh... the price of a 250GB 2.5" HDD can be anywhere from 50 to at least 130 dollars, depending on where you buy it and what manufacturer it is from(cheap and possibly crappy, or a bit more reliable and more expensive), so it's not really even cheaper to do it that way. I'd think people would rather go with the EASIEST solution (buy a 350$ 250GB PS3 straight away) instead of the one that causes extra work, which might or might not even be cheaper (buying cheaper model for 299$, then upgrading it with a bigger HDD, ending up with spending 350-400$ to do so).

" I don't think anyone is really impressed by the bigger numbers."

It's not about being impressed by numbers. All kind content (HD-videos, mostly, but also 5.1-mixed audio etc.) is already available for people and it can require a lot of space. Someone might want to store those things on their consoles, hence the need of space. Obviously you haven't moved to the digital era, but a lot of others have.

Also, there's the fact that Microsoft is offering a 250GB console as well, so Sony probably doesn't want PS3 to look like the lesser console. It's just a matter of offering different HDD sizes to suit different people's needs. Fine, you don't need a bigger HDD, someone else does.

It's slightly different with the PS3 though. The people who want more storage space are going to buy the cheapest PS3 and upgrade the hard drive themselves. You're kinda stuck with the 360, especially until we see if the new dash update nukes modded hard drives like it does 3rd party memory cards.

I still think they need to give PS3s backwards compatibility again. I'm afraid mine will die some day and there goes BC forever.