The main question that has to be answered is "How do you attract developers and consumers to your product after the next generation has began?"
As has been pointed out already, a system like PS2 had can continue to attract developers because the low development costs and massive userbase makes development more profitable (than Next Generation consoles) for years after the next generation began, and profitable (in general) for years after that; at the same time, a system like the PS2 can continue to attract consumers because it is very affordable hardware and has a massive library of high quality budget games which makes it a perfect choice for a gamer who doesn't want to spend that much money.
If you assume 2011 as the begining of the next generation, the PS3 will (probably) not have an amazingly large userbase (probably in the 40 to 60 Million range), will not be that inexpensive (at this rate, probably $200 to $250), and game development will probably not be that much less expensive than Next Generation game development (probably 50% to 75% of the cost of Next Generation development). At this point in time the PS3 will be facing competition which is far more powerful without being that much more expensive (4 to 8 times as powerful, at $300 to $400 should be easy), that includes enhanced versions of all of the special features of the PS3, and has a new and improved version of Wiimote-styled controlls (with developers who know how to use them in a meaningful way).
Honestly, unless Sony (magically) turns everything around and starts selling 20 to 30 Million consoles per year in 2009 the PS3 is going to be lost in the mix as soon as the next generation begins.
