While some of your reasoning is sound, other parts are just wrong. However i think you might be on to something about skipping or at least severely delaying the release of there next console for maybe 3 years or more into the life cycle of the next nintendo and microsoft entry. As you have stated, a new console to release in 2011 or 2012, 2013 will not produce games that look SIGNIFICANTLY better than PS3, especially not to the average joe.
Just look at what happened when xbox 360 first launched. People where saying it looked like xbox, when that is clearly not the case. The major reason for this was due to people not playing there console on a Full HD TV. Games will need to be 1080p next gen with good AA to really have a chance of looking better. And there are still far too few people with large 1080p TV's.
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