This generation won't be over soon--late 2010 at the very earliest.
I'd say it's going to be an intense game of chicken for who releases first, although I think 'releases first' will be a misnomer. Sony and Microsoft now realize the value of releasing first, but they also realize the folly of releasing too early (Microsoft had RROD, PS3 came out earlier than Sony wanted and hence they couldn't cost-reduce as much). Therefore, they'll be tensely waiting to announce their next systems until they see what their opponent is offering and when, and get it out around the same time.
Then, Nintendo will sucker-punch them and release three months earlier with the super-system they're developing in secret right now 







