First, there was the leaked K-Mart circular revealing a sweet $50 price cut to the Xbox 360 Premium. Since then, the possibility has gotten firmer. Notably the Hollywood Reporter says that a "major retailer" and industry sources have informed them the cut will happen before E3 (though they call it the Pro). And usually reliable Ars Technica says the 20GB model is getting cheaped out to be replaced by that rumored 60GB model.
It all makes sense to us. Dropping prices will move the older units, while a 60GB model will better compete with the PS3 on specs, filling and rounding out that gap between the 20GB Premium and 120GB Elite. [Hollywood Reporter, Ars, Kotaku]