ckmlb - if 700k is the case (which I am assuming so), it's going to still be very advantageous for developers. Many of the games that would of otherwise failed on 1 console as an exclusive (Darkness, VF5, Rainbow Six, ect), are becoming very lucrative. This way, if it does well on one console (RSV on 360), the extra money from the 2nd console becomes gravy, and vice versa. For the Darkness, it'll easily pass 500k in the US alone for both - a strong succuess for those that made the game, as it should hit 750k or even 1m w/w.
Likewise, MP helps both systems hardware out. The 360 gets a huge boost in Japan (can you even imagine what RE5 is going to do to 360 hardware?), and likewise, PS3 gets a boost in the West as the PS3 owners get a strong version of each game, and neither version is neccissarily worse in any ways (whereas last gen, the PS2 was always the definintive first edition, and later on, the Xbox and GC got the scraps).
Because of this, I still believe it'll be hard for the Wii to get a huge leg on the major 3rd party IPs. In the case of GTAIV, sales won't miss a beat. Yes, they had to go on 2 consoles, but sales wise, GTAIV should get to GTA:SA levels or higher. For RE5's case, I see it doing better than any other RE yet.
Back from the dead, I'm afraid.
