Simple answer is - yes. The reason? More of the early gamers from the late '70s-early '80s are now parents, homeowners and business owners - and have grown up with gaming. Now, their children are keeping the trend going. While I don't have hard numbers for you, I do have an article I can give you a link for to confirm what I am saying.

I'll track it down.

Ive heard reports that the market hasnt actually been getting bigger since N64

Like i mean revenue up yes bc of inflation and more sales, xbox live, downloads etc. but actual hardware numbers havent substancially increased since PS1 and N64

From this table, you can see how, through the generations, the console gaming market has grown. What's interesting is the growth in the "Others" region with the release of the PS, but also how the Japanese market has shrunk during the last generation (compared to the previous one). Since this current generation is not yet complete (and even some of the last one, since the PS2 is still selling), you can't tell how the market will grow/shrink yet, but for that, we can look at some first year sales compared to last generation first year sales:

Since the PS3 hasn't been out a full year in most of "Others", and as long as it sells 150,000 or so units a week from now until then (March 27th I believe), which is very likely, we'll be right on pace to have the same amount of sales as last generation.

Obviously this isn't the greatest research ever (I simply took all the information from this site basically and put it together in Excel), but it helps show how much the PS brand has expanded the industy, and how, without the Wii, this generation would be falling short of the previous generation.

Edit: Those tables hate me