No one is forcing devs to have to take full power of the PS4 right off the bat. They can do so gradually at their own pace. Remember that this console is being made for a ten year cycle, so it has to be powerful to be able to withstand the later part of its cycle. Hence Sony can take a loss now to widen its userbase (not to get internet fandom) which will eventually mean more games being sold and that in turn will give Sony more money in royalties to overcome the loss and become profitable. There are devs such as Epic, Crytek, Dice, Ubisoft, Activison, CDProjekt, Bathesda, etc who want more power in the consoles so that they can use the full potential in their engines such as UE4, Cryengine, Frostbite, etc.
I suppose at the end of the day, the big developers who want to utilise the new console powers will do so and there will be always those who want to make bigger and better. On the other hand, the smaller devs can still make games that are not as graphically intensive, but are more artistically and gameplay wise very good, i.e. XBLA/PSN indie games. So this will leave us consumers with games that are very big and games that are very innovative and good. There won't be any "middle" ground or shovelware. Or so I think.
