Sony is cutting prices on the PS3 and will finally be at or below the price of the Xbox 360. It’s also releasing a bargain-basement priced PSP in Europe, albeit with limited features.

The price cuts mean the 160GB PS3 now drops from $299 to $249, while $299 will now buy you the 320GB model, previously $349. With the new prices in place, three hundred bucks will get you 250GB of Xbox or 320GB of PS3, which looks to be the first time that there’s been such a favorable price comparison for Sony.

It’s notable that many message board posters are suggesting a $199 price point would have made more of an impact, though it’s hard to see how the economics of that would have worked short of copying Microsoft’s 4GB “Arcade” edition.

Amazon is already listing a $299 bundle that includes the 320GB PS3, Infamous 2 and 30 days on PlayStation Plus.

Meanwhile Sony is releasing a new edition of the PSP that’s currently scheduled to be Europe-only. It’s priced at 99.99 Euros, which is around US$140 to $150. While it does have a UMD drive, there’s no Wi-Fi connection, which not only means having to hook it up to a PC to download games, but it rules out online play.

And in other Sony news, the PlayStation Vita, which will be a high-end replacement for the PSP, has been confirmed as having 512MB of RAM. That’s despite rumors memory could be an area for cost-cutting.