Sony's confirmed that they'll be cutting the price of the device in the UK to £129.99. That might still sound like a lot, but it's worth noting that if you buy the device before January 11th you'll also net ten free games. Seeing as the PSPgo is a great piece of hardware, the price-point with the ten free games is amazing.
The system can be picked up from the Sony Store. The on-going price-drops provide further hints that the PSP2 is coming pretty soon. We'd put money on an announcement after Christmas.