The 360 will last 7 years simply because it has to.
Making a console "next-gen" past the architecture of the 360 is not impossible, but it almost definately involves making the next-XBox a parallel architecture, much like the PS3. If MS want to make a console that is signifigantly faster than the 360, they have to completely redesign it, and that costs time and money. MS will hold onto the 360 as long as they can.
The PS3 can leap to the "next gen" very easily, and it can even still offer backwards compatibility with the current gen, whereas the 360 likely cannot (due to its need to redesign). The Cell could be scaled to have, for example, 32 SPUs, with 512 KB or 1MB localstore each, maybe even the PPU could be turned into something more similar to the 360's triple core processor.. voila MUCH more powerful console, thanks to forward thinking. The 360 represents the pinnacle of "old school"... or maybe I should call it "last school" design, which is one of the reasons it has so much trouble with heat.
Since the old "hardware doubles in performance every 18 months" died during the development of this generation of consoles, I would venture to say that the console lifespans from here on out are going to be a lot longer, unless some pretty major breakthroughs show up in the near future (like cheap diamond wafers, although even that has near-term limits).
MS is not putting you on when they say "7 years" for the 360, and Sony wouldn't be if they said "10 years" for the PS3. The 360 will likely be the only console able to run 360 games for a loooong while (or ever), too, so I sure do hope they make one, down the road, that won't RRoD so much.
