considering the technology behind it, the price isn't that bad. 

However, it gives Sony a great opportunity to bring a super cheap handheld into the brawl. "

That's kinda hard to believe. Apple's products sell at around twice the price the 3DS will be in Japan, and they are doing very well, and they are Nintendo's only competitors in the market.
 
Unlike, the PS3, it is not the most expensive in the market, the 3DS is actually the cheapest of the next gen handhelds (3DS, iPhone, iPad). 
 
However, it gives Sony a great opportunity to bring a super cheap handheld into the brawl.

So, today Nintendo finally announced the final plans for the 3DS launch. Japan gets it on the 26th of February, with the rest of the world waiting a month before getting their hands on it. A whole ton of data came out: it comes bundled with a charger stand, an AC adapter, a 10cm telescopic Nintendo 3DS touch pen, a 2GB SD card, six augmented reality cards as well as instruction booklets. New functions include a slide pad, motion sensor and gyro-sensor. It will have parental controls like the Nintendo DSi and the DSi XL portables before it. It is can play games downloaded off the 3DS's Virtual Console as well as games downloaded onto a Nintendo DSi and works with  Nintendo DS game cartridges, and keeps the cameras of the DSi line. They even announced exact sizing, which is a little too dull to post.
 
None of that matters, though, compared to the biggest statistic of all: price. And that is where I think Nintendo will lose people. 
 
The announced price in Japan is 25,000¥. Current conversion rates on XE.com put that at $299.02 in the US, and £189.30/€219.25 for Europe pre-tax (UK typical rates put that at 20% extra, pushing it closer to £230/€265), which is more than the Wii. 
 
Now, yes, it's a very cool piece of kit; portable 3D, capable of running games with great graphical quality, etcetera. But let's be serious, here. For the UK price, you can have a 250GB Xbox 360S with 3 games and £20 spare to spend on more stuff, or be £20 shy of a 160GB PS3 Slim. Both offer way more playability. If you insist on being portable, you could have a PSP and a DSi together for that cost. Is it really worth that much? 
 
I'm sure it will sell well at launch, but like it seems is happening with the Wii now it will tail off afterwards if they can't justify it well. Nintendo need to learn the lesson from Sony and the PS3 launch, which here in the UK launched with a bit of a sad trumpet due to the astronomical pricing. A high entry cost means early adopters might be the only adopters for quite a while, and without holiday sales to prop it up, this could be the first time another company (Sony, with the practically confirmed PSP2) takes the handheld crown...