Well the 40gb has allowed the PS3 to finally be competitive, I'll give it that. But ww it's not actually catching up to the 360 at all. And if it wins Europe but loses NA it'll be in a very bad state. As aside from racers, and Euro sports, 360 will continue to be the primary system for pretty much all western games, as NA is the primary market for them.
Casual games do better in Europe than NA, but that's not the PS3's strength, it's Wii's.
Japan won't help much either considering PS3's getting creamed by Wii there and I expect 75% of Japanese games will goto Wii.
PS3 needs to close the gap in NA.