You have to remember that the current chips are 300M transistors, both the Xbox 360 and PS3 respectively. A modern GPU would be like the Xenos is to the RSX except it would likely have at least 4* the number of transistors. The Juniper GPUs from ATI are 170mm^2 and almost a billion transistors and they have about 5* the rated shader performance. On 28NM which is coming in 2011 they could fit 1.5B transistors into a space not much larger than the current Xenos die size.
You have to remember that the consoles are far more efficient in terms of how they use their resources and they don't have to use rediculous levels of AA and they can implement more efficient software techniques. A humble Juniper class GPU could match what the top of the range Nvidia chip can achieve if fitted to a console.
Yeah, you do have a point. Consoles do have an advantage of not requiring as much raw horsepower as PCs since they are purpose built for gaming and are much more optimized.
I do await the next gen talks to begin so we can see all the fans discuss the "GFLOPS" or the PS4 CPU vs the X720 CPU... Especially considering that all that stuff really doesn't matter as much.
Sony could have taken the cheapest Athlon "X2" cpu and put in a monster GPU (8800gtx or ati4850) with more ram on the side when they were making the PS3...which would completely annihilate whatever the current setup of the cell + RSX has to offer.
MS kind of knew this with the Xenos hence why 360 is visually competitive with the PS3 despite being put together in less than a year and being released a whole year sooner.