The earlier quoted $399 price for Palm Pre was actually for a handset without contract on Sprint. And it is only one of the possible price points Palm is contemplating. Another one is $499 for a phone without contract. So when Palm Pre starts shipping on Sprint in summer of 2009, the actual pricing should be either $399/$149 or $499/$199 for no-contract/2-year contract Pre. However, the final decision will be based on the competitive landscape, when the next gen iPhone and Storm devices will make their appearances around that time.
The pricing seems very logical to me and the fact that they would want to wait on pricing based on what RIM and Apple are going to do makes me think Palm really wants to fix what they have broken.