Fo serious. I'm seriously shocked. Historically I've been an ATI and Intel fan, now I don't know what to believe anymore. This could be very could for Nvidia; if Intel takes sides they don't have any other major options (Matrox is a bit of a minor option). Not that I see Intel buying Nvidia, but for those laptop makers especially, who fill their units with Intel parts, I could only guess that Nvidia would look a little more favourable than an AMD powered solution.
That said, this could be very good for development of both technologies, and for prices. Graphics has been for a long time one of the fasting moving IT fields, and tapping into the new architectures of core development could mean an even greater boost. And maybe if we're lucky, some of the speedy graphic's genii can rub off on the chip development cycle, for speedier product releases. Let me put it this way: I'm told that AMD and Intel often have chips ready for market long before they are released, due to their previous product's life cycle still going strong. I can't say I've ever seen graphic card makers make that same kind of choice. You can spend $1200 on a new Nvidia SLI, or something similar from ATI, and in a month you'll be outdated.
So, we'll see what happens. In regards to prices, desktop CPU prices will be going mad this summer, as a few people have pointed out, so perhaps something similar may be forced to happen by this $5.4 billion merger.