I don't think the immediate situation would be that much different. The sales of the 360 and PS3 would probably be notably higher, but not by more than a third. The 360 is already starting to make a profit, and even the PS3 looks a lot more likely to reach 30M+ units than a few months ago.
What would be different is how things start developing towards the end of 2008 and in 2009. The Wii has the potential to far surpass the userbase of any console before it, and with its low development costs offer the kind of innovation in games nobody would have had the balls for in earlier generations.
The other consoles don't have anywhere near the same potential in this regard, due to the huge costs of developing HD graphics, and much more expensive dev kits. The percentage of all games that are FPSs would also be even greater, something I have a very hard time imagining.
We'd be getting more of what we're getting now, now less, but certainly no more. Not the worst case scenario for a console generation by any means. With the Wii we have the potential for so much more, and it's starting to look like the excellent first year was only the beginning.