Actually the way it fully works is: if you have money down you have priority.
But you have 48 hours to come get your pre-order, and then it is supposed to go to the next in line.
Now I worked for EB for six years, and I can tell you that we didn't often just offer up someones pre-order just because they couldn't make it within the two day limit. Oftentimes the consoles of people who pre-ordered but did not come in were the ones who, when called, said something to the effect that they couldn't get it due to lack of money, etc. These are the people who, a year or two down the line, still had a pre-order on a PS2. Unfortunately, times have changed, and it seems like not even being friendly with the manager helps anymore.
Given how high the stakes are on these new consoles (you can bet just about every kid wants at least one of the for Christmas) they probably will adhere to to that two day limit. So, what it comes down to is even though you don't want to wait in line at launch for it, you are still going to have to brave the crowds to get it in those first two days. As you may know, EB was bought by Gamestop and now uses their more ridgid policies. I left before the buyout and I have had pre-ordered games sold due to getting to the store a day late. I had to hustle to make sure I got me DS. Also, if you want to better your chances of your system not getting sold off, pay it off in full before launch day.
As for the "production and shipping issues" frankly this is both truth and a scare tactic, as what they are trying to say is there may be system shortages. All console launches have system shortages. Heck, Sony even said that they have halved the number of PS3s that they are shipping to North America. These mangers are trying say is, like I said, if you want it, get to the store, pronto. What that statement also means is, like the PS2, PSP, DS Lite, and Xbox 360 (the HDD model) etc, etc, that they expect shortages after they get their allocated amount. So if you miss your console (or if you get a defect) you may have to wait a while until product is re-stocked.
And yes, this fine print is a way to cover their butt, so I you are late getting your system, then they can sell it to somebody who didn't have a pre-order, but is making a stink about not being able to get one for his/her kid for Christmas. I've seen this happen, it's both funny and sad at the same time.