It's probably a good idea - especially if the game is a quality product. The problem that Atari is dealing with is that they have two different damaged brands in this release. The Atari name isn't in great standing at the moment, and the Test Drive franchise isn't usually considered top-tier anymore. They're also taking a serious risk with the gameplay elements of Test Drive Unlimited, and asking their customers to do the same.
If the game is good out of the gate, it will foster a better reputation for both brands, and a group of loyal players that will be looking forward to buying additional content. I'll probably pick it up as a comparison to PGR3, and the $40 price makes the decision a lot easier. On the other hand, making the game bare-bones and requiring the purchase of the content packs to fill it out would certainly destroy any chance of this being successful. Hopefully the reduction in price isn't a sign of a reduction in quality.
I've actually been looking forward to the game though, and I hope that this is a winning strategy. Personally, I'd rather see cheaper buy-in for games and then additional downloadable content packs for a fee. It moves us more towards episodic content, and really gives the gamer greater control over how much of what type of content they want.