I could be wrong but I suspect that the success of the Wii will translate into Sony and Microsoft being less willing to lose as much money (or increase the price of their console) in order to increase processing power of their systems.
Now, some people are under the assumption that there really is only two market positions available when it comes to processing power; that a company can choose to make a low performance system like the Wii or a high performance system like the PS3/XBox 360. This is false! There were several intermediate levels for most components between the two levels of systems, and at a level not much below the HD consoles there was a level which could be described as the "Best Performance for the Dollar" which most new consoles have aimed for; consider that the Gamecube was $200 system with minimal losses at launch (less than $20 IIRC) and was still a high performance system when it was released.
What I would expect from the PS4 would be a system with performance similar to a mid-level gaming PC from the middle of 2010/2011 (depending on whether they system releases in 2011/2012), and it will still use many conventional technologies for the time (like a Blu-Ray drive).
