The Vette isn't the only competition Ford needs to worry about. In the muscle car arena, the GTO is a direct competitor for the Cobra. 350hp, RWD, American, $35k. If the Cobra is going to keep its lion share of the market, it needs to trump the GTO somewhere. 400hp for $35k perhaps. 450-500hp for $40k perhaps. But, it is no longer the only kid on the block.
To take this one step further, if we are talking perfomance cars, you also have to bring up the 350Z/G35c, Evo 8, and WRXs of the world as well. Obviously they are not direct competition for the Mustang, and will never sway a muscle car fan. But, they all are right around the 300hp/$30k tag and have far better handling than the current Mustang GT (the new one remains to be seen). This will sway quite a bit of customers that aren't tied to the musclecar. The closer the Mustang GT gets to the $30k price tag, the more compition it will face, and most likely the more sales it will loose.
The simple fact remains, people who are looking for a performance-oriented, relatively affordable car have more options than have had for a very, very long time. And while Ford has its place in the musclecar world firmly solidified, some other cars may start to eat into its high volume sales which makes the Mustang so successful (by allowing Ford to keep the price down).
Fortunately for us, we will all gain by this competition as the performance to price ratio will continue to grow.