I checked Amazon website again after 4 hours of making the original post and the price of $248.98 from the seller called XP Passport no longer shows up in the list of sellers. Maybe N800 is sold out from this seller.
Also, circuit city website lists the price now as $299 (but out of stock) which makes me think that the retail price could have been dropped to compete with iPod Touch.

I also noticed that N800 has the top Amazon sales ranking among devices in its category so it must be selling well:
http://www.amazon.com/gp/bestsellers...007037-6427039