Just to further my (and most other people's) point ...
Every major manufacturing process improvement doubles the number of transistors on a chip, while improvements in semiconductors increases the clockspeed that a processor can run at. In 2010/2011 Microsoft should be able to use either a 32nm or 22nm process which would mean that they will be able to increase the number of cores on the XBox 360 CPU by 4 or 8 times; at the same time you would expect a clock speed increase in the range of 2 to 4 times.