The rumors were right.
During Sony's Gamescom 2013 press conference, the company confirmed that a $199 12GB flash-based PlayStation 3 model will be available in North America. In fact, it's already available at Amazon, Best Buy and Target.
Various retail leaks indicated that this budget-priced model would be coming soon, and now it's official. Sony also revealed that the same 12GB PS3 will see a price drop in Europe, falling from €229 to €199. This particular model has been on sale in Europe and Hong Kong since late last year; it's finally making its way to the US now. The only question is- will it be popular? Twelve gigs ain't a lot, even if you're only a casual gamer. But that price tag might be just the ticket for those late to the current generation, so maybe it'll be just fine.
Of course, you can probably expect a price cut for all PS3 models some time soon after the PS4 launches.