It would seem that several retailers haven't gotten the memo, as many still list the drive at a $149 price point (the $129 price is listed on GameStop's website, for what it's worth). Of course, the drive can also be found much cheaper than the new $129 price, though readers should be aware that there is a very healthy knock-off hard drive market out there.
While Microsoft won't directly confirm that the 120GB is kaput, all signs are certainly pointing that way. The company has already announced that a 250GB standalone drive will be made available in Japan. With the price cut now effective in Europe and the US "while supplies last," it's likely only a matter of time before Microsoft announces the 250GB drive for other territories.