The majority of game systems are sold to parents, not kids. At $99, parents could afford to get the system and not think too hard about it. The games are typically $20-30, versus $60. Plus, there are a ton of used PS2 games now that it is "old".
Look at the Wii. It's certainly not a better system than 360/PS3, the games are typically inferior, but it sells more than 2:1 versus 360 and PS3 combined.
Smart move, even though it's only $30 less than it was a month ago.
^NS - Acutally, every time Sony drops the price of the PS2, the sales go way up for at least 6 months.