Apple dropped the price of its original iPad by AUD$180 when it launched iPad2. The main advantage of the new iPad over the original one is that it has camera, is twice as fast, and is thinner and lighter.
I am of the opinion that iPad competitors will have to compete with both the old iPad (on value for money) and the new iPad2 (on features and price). The reason why the original iPad is still appealing is that while the camera is useful for video calls, you probably will not be making many such calls. After a while, this may cease altogether. As for the difference in speed, weight and thickness, I guess you can get used to that over time. So if you can get a great discount on iPad1, this is really value for money. Even then, perhaps the new price ($449) for an original iPad is still too big a tablet to swallow... I think $300 is a more reasonable price point for mass adoption in this segment of the technology market.