Probably already been said but:
When the NES was on top, it wasn't the best hardware. Lots of Master Sytem games, even versions of the same games, offered features that the Nes didn't. Meanwhile Nintendo was able to make all kinds of crazy rules for third parties and they followed because they were the only game in town. Wasn't until the N64 that Nintendo's dominace came to an end. At one point, they thought it was okay to charge over $80 for a cartridge--and this was in 1997!!
Sony dominated and we settled for faulty hardware. I don't care what anybody says, I treated my consoles like royalty. There was no reason why I should have had to purchase two PS1's or three PS2's. Meanwhile Nintendo and Microsoft were doing their own thing in attempts to become successful. The online services we enjoy now, the motion controls, the integration of consoles and portables were born of this.
When Sony released the PS3, they had to step their game up. Console quality improves, online features improves, first party games improved, Sony themselves improved==because they had to!
So the PS4 will be dominant and there will be short term gains as mentioned in the OP, but who knows what we'll sacrifice if they dominate to a degree that Nintendo and M$ don't fight back? If the PS3 dominated, would the PS4 be $399 at launch? Would the controller have improved? Would we have PS+? Would they have pushed their studios?
Even the Nintendo dominant consoles allowed the public to settle for monochrome consoles and no backlight. If someone were to really kick Nintendo's ass, the 3DS would be a better console. It would have to be. Look at the Vita. Sony threw everything at Nintendo--a lot of features I'd like to have in a Nintendo portable--but since Nintendo is dominant, they don't need to improve. Gotta look at the bigger picture.
*I freestyled this post, btw. Not much thought behind what I wrote*
