The main reason for this seems to be the poor sales of their new 3DS system. (Wii sales have certainly been down as well, but that was already known and accounted for in the earlier projections, it was the 3DS sales that caught them by surprise.) Some people are blaming the problems associated with the earthquake in japan, some are blaming the high price of the 3DS, some are blaming the lack of a good lineup of launch games, and some are blaming the 3D "gimmick."
The silver lining is that whatever the real problem is, Nintendo has decided it needs to slash the price in order to get stock moving again. On August 12 the 3DS is going to drop in price from $250 to $170.
For those of us who already own one (me, beth_leonard/jon_leonard, anyone else?) as long as you've registered in the eShop before August 12 you will be given 10 free NES games and 10 free GBA games. The NES games will be available to early adopters (or "3DS Ambassadors" as Nintendo is calling them =P) on Sept 1 and will be available for sale to everyone else sometime later. The GBA games will be available to early adopters sometime before the end of year, and will supposedly never be available for sale. (Personally i think that means they're going to be given away through various promotions or be a Club Nintendo reward at some point or something.)
Here's the announcement from Nintendo, which has a few more details, including a partial list of the games.
I think a price cut is a good idea, though i'm a little surprised by the size of this one and how quickly it arrived. I think it might have been a little better if they'd announced a $40 or $50 price cut now, and then waited to announce another $30 or $40 cut right before the Playstation Vita comes out. But perhaps what seems like a quick series of small cuts would give an overall worse impression than one steep cut? I dunno.