Tesselation creates an illusion that theres more polygons on a rendered object than there actually is. So yeah

I'm sure that neither Sony nor MS will release a PS 3.5/X360.5. Both new consoles will have a good leap compared to this gen and will be close in terms of power.

The only difference from the Ps2-Ps3 leap to Ps3-Ps4 leap is the budget. So yeah, dont be surprised if it is only marginally powerful. 

There is no magic wand, there is just money, if Nintendo can toss enough money into it, then they can at least contract people into creating something for them that would be a wrapper for Havok or PhysX or other physics APIs for the GPU and ship that off in the dev kit to offset the weak CPU.

Budget?  Lol.  The costs of the PS4 R&D is going to be quite a bit lower than the PS3.  This is because Sony had to not only R&D Blu-ray and the Cell, but also include the tech inside a $500 console that cost ~$800 to manufacture.  The PS4 will still use Blu-ray, which has dropped exponentially when compared to 2006.  Even if Sony were to go with a Cell 2.0 or a hyrid of techs, the vast majority of R&D cost will have been covered with the original's creation.  Also, RAM has dropped quite a bit in cost.  This leaves a much bigger portion of the budget to go into a very good CPU and GPU.  I wouldn't be surprised to see the PS4 launch for ~$400-$450, while either breaking even or being sold at a slight loss, and have as much as a gap as the PS2 to PS3.

that sounds great especially the RAM.  At least then we can have a great deal of multitasking like listening to music and surfing the internet while gaming.  I hope they have a 500gb version at launch so I can ask for that for Christmas and transfer all my 500gb PS3 data over.

I hope Sony can at least build a machine that will compete with the next Xbox graphically. If not, then alot of there current fanbase will likely switch over. They spent years putting out top notch exclusives from a graphical stand point so they have to understand that is what the fanbase wants to continue. It would be much like this holiday season for there exclusives. They spent years putting out "core" exclusives and then all the sudden switch to casual mode this year and nothing is sticking.

If the PS4 is only a small leap in the specs department, I will stick with the PS3 for as long as it's supported but that's it.

False, tesselation actually changes the number of polygons in a model.

What you are thinking of is bump mapping (and normal mapping, parallax etc) which use texture effects to create the illusion of greater model complexity.

it works best on flat surfaces, and doesn't change the actual geometry and silhouette like tesselation does. 

^^^Ohh ok, but when tessellation is on, does it consume more "power".

Photoshop can accelerate certain effects via GPU, some browsers support GPU accelerated page compositing, 7zip (and Winzip) support GPU accelerated compression, and there are also lots of password "recovery" tools that support it.