Just announced, though long awaited, the X360 Slim. Priced at $299 this tie for the PS3 Slim has built in Wireless-N, a 250 GB HDD and a slim angled chassis. Here's hoping it doesn't have hardware failures.
Check out more images from E3 on Joystiq
Overall, it's not looking too much smaller to me, but the price, storage and wireless are a nice look, an dlong overdue.
Also don't be surprised if you end up picking up a Kinect (formerly known as Project Natal). Microsoft and Sony are definitely jumping on the motion control bandwagon and the six launch games seem to be mirroring Nintendo as well. Here's hoping for some innovation in the field!