Microsoft's weapon against the Nintendo Wii this Holiday season is apparently the Xbox 360 Arcade bundle.

An image of the packaging of the Xbox 360 Arcade leaked on Ars Technica. The unofficially expected price is $279.99, which would be close enough to the Wii - plus you can play Halo 3 on that console.
The Xbox 360 Arcade is coming with 5 games (Uno, Packman,...), a controller and a composite cable.
There is no official release or announcement from Microsoft yet.