Yep, you're right.
But: When the devs just simply stop producing these over the top high end games, gamers can complain what they want, these games aren't going to be there.
In a way I guess the success of Wii might be the saviour of the industry, they just don't know it yet. In 5 years, if WiiHD will come out, which will probably slghtly more powerfull than PS3, the production of high-end graphics will have decreased dramatically in costs. The industry might need a few years to focus on their business side more and in the meanwhile produce good but cheaper games that make good profits.
Of course the HD consoles can remain profitable as well, but a company can make less mistakes. A bomb of 30 million can be the end of a developer, or at least a big problem (Stranglehold).
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