Do you think there would be a huge detrimental effect to the PS3 being delayed until 2007, if Sony lowers the price and unveiled a huge list of excellent launch-window games?
So far, the PS3 is looking quite unapproachable, mainly due to it's high price and the number of high-profile games being further off and not too far above it's competitors graphically. The PS3 also has quite the similar number of major franchises as it's competition.
The only way to fix that, and have the PS3 be a formidable challenger unafraid of all competition is for a short delay. The main reason for such a high price is the technology going into the PS3. The Blu-Ray is very new, and after a number of refinements and making mass production more feasible, prices will inevetably go down.
This also gives Sony time to reconfigure the PS3 system, perhaps increasing the clockspeed of certain processors or the amount of RAM, therefore "Dreamcasting" the X360 and Wii with it's great specs and apparent lineup.
Think about it, the 360 didn't exactly catch on like wildfire, as Sony feared and MS hoped. The Wii doesn't have too much of a chance outside Japan. Sony could easily afford it, seeing as the PS brand is strong, and they have a ton of support.
What do you think would happen if they delayed the PS3? Keep in mind that the PS2 was also delayed over a year from it's original expected launch.