Well, the Wii will probably come in closer to $199 I think, but you have to keep in mind the hardware involved. Nintendo's next system is not very technologically advanced. It'll be faster than the GameCube, but won't do HD and uses "standard tech." Both the Xbox 360 and PS3 are using multi-core processors (PS3's has 6-8 cores), have HD-outputs, etc. plus the PS3 includes a Blu-Ray drive. I'd guess Sony is taking a $150 to $200 bath on the hardware alone, while Nintendo will probably make money on theirs.
As for the hard-drive, part of it is for caching data, but some of it's also for giving people the ability to buy content via each system's online store.