The early generation games consoles used to be under £200, but now new consoles are over £400. Do you think they are worth that much? How much are you willing to spend on a console or handheld?
I'm not as much of a gamer as I used to be, so I'm willing to spend less now than I was before. If I put that fact to the side for a moment, I think £200 - £250 is reasonable or up to £300 if it comes with a games bundle.
I would be willing to pay a few hundred bucks for a console, assuming I had the extra money to spend, but this means that I wouldn't be getting a console right after release and would have to wait for a decent price drop.