This has been a growing problem since the Atari 2600 days when many games were made by just 1 person. It's unfair to blame Microsoft and Sony for what is basically technological progress.
I know Nintendo is getting a lot of praise for the Wii and it's keeping development costs down but they didn't solve a problem just postponed it. Eventually they will have to bring out an HD console and have the same problems that the other consoles have.