Hmmm.. an interesting topic and one that is very difficult to analyse in regards to its effect on the gaming market. I definately agree that larger Japanese developers will start to focus on the Western market, or at least games which appeal to both, and as you said this already appears to be happening. I'm not sure how smaller, niche developers will be affected as although their games rely on the local market, the demographic who buy those products are perhaps the type who will continue to do so regardless of a worsening financial situation. I would expect family focussed and 'casual' games may suffer more but due to their already impressive base sales it hopefully won't have a major impact.
A weaking yen could be good for Sony/Nintendo as obviously their revenue from exports would increase which may be enough to offset any decrease in the Japanese market. Although I'm sure a weaking yen has other implications and I'm no economics expert so I can't predict what the overall picture will be.
And then there is the knock on effect to other countrie's economies which you mention which I wouldn't even know where to start with!
