We (Germany EURO Land) also have (now) 19% VAT and still get the PS3 for 499€ and 599€ respectively. I think one thing is, that we can directly compare prices with France and Italy and importing is completely legal (and does not cost any duty fees) and not even much pricier than buying it locally.

If the PS3 was 50€ or more Euro less in France or even Austria, I would import it (Usually, shipping from Austria is only 5-10€ more) or just do a quick drive to Switzerland or France (both about 150km each route, 8Ltr/100km at 1.219€/Ltr equals in about 30€, still less expensive) . Ok, the Dutch have it worse. As Wiki tells, the 60GB version weighs in at 880€ or so (iirc). I would definately take this little road trip to Germany or Sweden in that case (Swedish people pay 650€ iirc).

We pay $660 (incl. 19% VAT) in Germany. Do the math, it is even cheaper for us to import from the US or Japan (as no VAT applies for this kind of deal) and the Brits are in less in favor… (I wont do that, because we dont have any warranty that way)

It’s a mistake not releasing the 20GB PS3, if it’s true. £425 is a lot of money and not a lot of people will view that as good value whereas £350 for the 20GB PS3, which compares favourably with the 20GB 360, would be a lot more appealing.