Hell, the 250GB 360 Slim, with forza 4, skyrim, headset, and a controller, 2 months free live gold was only a measily $250.
I got one just because I work at a used game store, and never owned a 360. Now when I get the time I'll be able to pretty much get every game for at buy prices of under $5-10 for exclusive titles. Like the other guy said people that don't have one yet have a HUGE library of good rated games to pick up for DIRT cheap. Just because it's 7 years old doesn't mean it doesn't have any games still worth playing.
Graphics isn't everything to me. Loads of good games that dont come out for my PC to play.
And im sure the people that got one this cheap arn't gonna buy the "720 for $500" for many years till it gets cheap and a good library of games to choose from. Afterall whats the point? If you care about graphics enough just stay with a PC, it already has beyound 1080P visuals, and is faster than the 720.
Hell I still have an Atari, Xbox, Ps1, 2, nintendo 64, NES, SEGA genesis, SEGA CD, Virtual boy, Gamecube, all daisy chained to my spare tv in the guest room for good fun old times. why you ask? because graphics dont make a game.