I found this out yesterday, and now my PS3 is on its way to my doorstep!
Usually, student discounts don't apply to game consoles, but either there is a bug at HMV, or they are being very generous!
Basically, all that you do is use your HMV Student Card as usual to buy this item, and you will get a 10% discount from the £299.99 price tag. You can also get Quidco on it as well, to add an extra £2.69 to the discount.
It does not work with the PS3 on its own, only with the PS3 bundled with GT5:Prologue.
I believe it's good value considering the PS3 is bundled with a £20 game! This might not last long if HMV catch on, so get it while you can, perfect if you are waiting for GTA 4 without a next-gen console (like myself)!