Surface at 199$ will help to boost the tablet and all new windows 8. Which is a must needed boost and help to keep Microsoft on track. This pricing is also important because Apple is expected to launch a cheaper and smaller version of iPad and despite wowing consumers at the time of Surface announcement, Microsoft will not want to compete with Apple using a product that is higher priced than iPad Mini or even iPad.
There are certain downsides too to this pricing, as it is further likely to anger OEMs as after the licensing and hardware costs, they won't be able to compete with Surface itself at $199, let along other tablets in the market. Acer has already pleaded with the company to drop the plans to launch Surface, but Microsoft is yet to announce otherwise.