I think the 200 dollar pricepoint is perfectly reasonable. The usual player costs 6-700 dollars and to get one that displays and offers the same (probably better) features than the standalone is a great bargain.
On the Blu-Ray side, the PS3 is a real bargain too. A 500 dollar blu-ray player compared to a thousand? Not to mention the PS3 is versatile in the area of components and such, so digital audio is a +, hdmi output for current, up to date hdtv's. Once blu-ray studios find a way to use better codecs (or at least drop to 1080i to use VC-1/H.264) they'll be able to deliver us truehd dolby, dolby dig + and all that other good stuff.