I think this will be competition for the lower end of the gamer market. Newegg has several 8600's and 2600's in various trim going for close to 200... Agreed also that it's something, anything to release while the new 8800gt is price gouging and wowing us all at the same time.
It's priced to compete with the 8600GTS and to be fair it does that well. It's not suppose to be a contender for the High end market. The 2900GT does not offer anything over the x1950pro for DX9 gaming just like the 8600GTS does not offer anything over cheaper 7 series cards for DX9. They both offer DX10 gaming on a budget even if they will never be able to play such games to there potential.
It's on the late side admittedly, but this section of the market (mid-range) is rather popular so it makes good business sense for ATI to compete here