This thread makes me sad.
The only reason what the OP is talking about ever happened is because console makers were spending bunches on private R&D AND taking a loss on selling hardware in exchange for royalties from selling software.
With the economy the way it is and with the rumors coming down the pipe of what kind of tech we're actually going to see in these machines, it is very doubtful that the same thing is going to happen again. I mean, hell, it'd be nice if it did (I'd FINALLY have games that properly push the hardware and give me a reason to upgrade), but I don't see any compelling reasons to believe that that's going to be the case.
Either way, even if the next-gen consoles are only the hardware equal of current-gen PCs, they'll still be a massive upgrade from the 360 and PS3. Perhaps we will finally see open-world games without low-resolution textures and draw distances hamstringed by the lack of available RAM? One can dream!