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Mr Khan said:

I'm the kind of person who feels that handhelds have their own generational running. 3DS will launch handheld Gen 6, and either N6 or Xbox 3 will launch console generation 8 (i have a feeling Microsoft's moving quicker than they're letting on. Kinect as we know it is a Beta, to iron out potential issues for a hardware-integrated solution soon to come, and also because Microsoft is probably going to want to line up console and PC capabilities again, though in this case it will be a smaller adjustment)

But the handhelds and non-handhelds compete with each other for money, developers, marketing, and shelf space, and that's what the "generation" terms are really about.  They're in direct competition in the current generation.  Think of things like Dragon Quest going from PS2 to DS to Wii, or all the ugly PSP-to-Wii ports.  Now 3DS is stealing Xbox 360 exclusives like Saints Row: Drive-By.