"1. Fast releases was how Nvidia BURIED 3dfx. "
The difference is that all new games also worked on the old NVIDIA cards. New games won't work on the old 360 though. That's the difference PCs are a rapidly changing environment, consoles are a stable platform.
"More frequent releases allow you to be more flexible to change to market demands and target new areas first. "
Yes but since a really good game takes 2-3 years to develop 4year platform would be terrible.
"An Xbox360 today is still just as good if the nextbox is released tomorrow. "
No it isn't because new games wouldn't be developed for the old system.
"All is fair,"
Has nothing to do with fairness. The question is if it is a sound business decision and 2009 would be insane. So I do not believe it.