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I stated something similar to what the OP said about a year ago. The only difference is that I believed Sony should have supported the PS2 for another 2 years and release the PS3 in 2008. There was really no good reason for Sony to jump to the HD generation when the PS2 was still selling well.

That way Sony could have released the PS3 with a lower price point and better launch titles. And perhaps they could have released their Wii-like motion controller since by then they would have known that control scheme is becoming standard.

I think Sony's arrogance lead to their plethora of bad decisions with the PS3. They assumed the PS3 was going to be successful no matter what.