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The convergence is so far a nice dream, and little more. Though it is true that PDAs, cell phones and mp3 players are converging, there are still considerable difficulties along the way. Interestingly, the iPhone/iTouch may pave the way towards multifunctional devices that are actually as easy to use as dedicated devices, but nonetheless 5 years seems a bit of a strecth, especially considering the requirements a portable gaming device has.

As for set top boxes, I don't think they are going anywhere within the next 5 years a least. As has been pointed out, there isn't enough bandwith yet for virtualizing everything. That time may come, or it may not, but definitely not within the given time frame.