You're definitely the one who's correct. In spite of what the other poster is saying, PS Vita IS using "off the shelf" parts. It's running a quad core Cortex A9 ARM processor (we're seeing them appear in smartphones already, starting this week at E3, and the dual core variant already exists in the iPhone 4S, iPad 2 and a fair few Android devices). It's also running a PowerVR SGX 543MP4+, which is merely the quad core version of the dual core PowerVR SGX543MP2 used in the iPad 2 and iPhone 4S.
I've been a systems engineer since 1996; I'm fairly hardware savvy as a consequence of that experience and training, and what struck me immediately upon the PS Vita's announcement was how generic the core hardware was. I don't say that as an insult; I think it's the smartest hardware design move that Sony has made in many years--one that I hope they replicate by developing PS4 as simply a more refined version of PS3, with an updated GPU, more cores on the Cell CPU, more RAM and a wider system bus.
PS3, like 360, is a very capable machine to this day. There's very little to be gained by an expensive complete re-imagination of the system, and a lot to be lost--including the library of existing AAA content and a slew of services, not to mention all the content now available on both PSN and Xbox Live. Microsoft and Sony would both be very, very foolish to release systems so radically different that they lose compatibility with that massive library of downloadable content :).
