Eh, we don't know that it won't pay off in the end of the generation...because we are probably not all that close to the end of the console generation based on what we've been seeing thus far...e3 will probably shine a lot of light on that...if there are no console revealings there it will probably be at least another 2 years before consoles hit showroom floors, and even then I don't think the technology has changed enough in terms of the Ps3 and 360....Although the 360 could use a better game delivery system, DvD is starting to bother me because they use it as an excuse to provide DLC.  And Sony could add ...Faster and more RAM or better secondary GPU for the developers that don't want to completely utilize the Cell for some reason or another?

PS4 to be a PS3.5? Very little R&D required, tweaks to HW & FW rather than an entirely new architecture. Solid state memory rather than HDD. No need for all new dev kits, or devs needing to become familiar with another entirely new system. Really sexy new case design with all those touch buttons back. Launch at $399. b/c with everything. Profitable from day 1.

The one thing Sony needs to not fall behind on is the data storage capacity of the disc media they choose. If Xbox moves to this holodisc thingy with 200-300 GB capacity and PS3.5 is "making do" with a 130GB 4-layer BR then that won't looks so good with the techy crowd.

Can't make any moves until PS3 is at least $199, and better still if PS3 is at $149.

You can do SSD on your PS3 now but whats the real benefit?  I don't anticipate SSD being cheap for another 5 years.  That's just wishful thinking to incorporate all you mentioned and still make a profit.

yes i think sony will make this move considering everything that happened this generation, but I am not even bothered about another one just yet, let PS3 peak first and then we can all have a new PS 4 or whatever lol

Yes right now the PS3 is perfect and in a perfect posection, we don't need a PS4 now, they will max out the PS3 by 2012, 360 has been maxed out , all games look the same as Gears of War 2, which is fine, but by 2012-2013 we will both want and need a PS4.

just imagine a PS3 with a CPU that is able to be utilised without a lot of low level hand coding that is faster under most conditions 1GB GDDR5 VRAM that is more than 4X faster than what is in the PS3 and the same again as RAM. a Blu-Ray drive that is 3X faster (now devs wont have to duplicate data and use unefitiant unconpressed data if they need more space) and a GPU that is 10X more powerfull than the PS3s (this would be easy by the end of 2010) there you have a cosole that can output games at the level of GoW3 at 1080p and 60FPS.

Theres always a need for a new system. They aren't going to set a generation out because they believe their system is 'powerful enough'. The obvious improvements like proper 3D support and 1080P output are always in the wings and they would not want developers to start focusing on an even more GPU centric development model which would make their large investment in the Cell architecture a wasted effort.

I was actually talking about quality of games which seems to be getting little coverage compared to sales this generation. Anyway i will indulge you.

Unless you have been ignoring sales figures over the last 8 months you will see how well the PS3 is selling in cmparison with the year preceeding it. You would also be very brave to bet that 360 will be ahead of PS3 at the end of this generation which has at least 5 years to run. The trends in Europe and Japan have given a momentum that looks set to run and run. And the fact that PS3 has outsold 360 since launch does not really tally with the doom and gloom you try and paint in your post.

It is far from perfect, it can ALWAYS get better. Two gens from now we will look back at this statement and be glad we didn't settle for the minimum.

Imo, the only flaw I see in this system is the crappy web browser. My cell phone has a better browser.