I really don't want to sound like a broken record, but it makes little sense to have multiple physical SKUs, simply because in an ideal world, you would want people to own the gaming SKU so that they can buy games, which is where the "real" money is made. If there is a media-only SKU, there's a good chance that Microsoft will never be able to recoup the cost from selling a low-end machine. You also have to start thinking about how a low-end SKU would compete with having less functionality than even an Xbox 360 today (can't play graphically-intense games), and a price of $299 just sounds like the end customer is being ripped off, compared to something like a Roku or Apple TV at $99.
The simplest idea to get more people on board is to subsidize the box by $200 and requiring a 2-year contract, so you'd turn a $399 console into a $199 box (magical price point), give maybe a free movie on Xbox Video every month, Xbox Live Gold, and $5 credit for $20 a month or something. As has already been thoroughly proven with cellphones, you can make swallowing a $600 item easy if you make the initial price low and spread out the cost over time. Thus, you avoid having to deal with yield issues of multiple chips, avoid having to keep up production with multiple SKUs to stores, avoid having "retard" SKUs clearly designed to upsell the customer, avoid having to convince someone to buy a "real" 720 after they already have the "cheap" one (a huge hurdle) and every system you sell is capable of playing $60 games (again, that's where the real money comes from).
