i would like to see them paying 40-50 dollars for a mobile game

No, thanks. I like the idea that massive distribution can make games profitable at only a few dollars per install.

There's a definitely a problem with the race to the bottom, though. Certain kinds of games are hard to make when they'd get no visibility at five or ten dollars, and the seductive success of the freemium model is seriously compromising mobile game design. See Real Racing 3, a most excellent game in a franchise born of $10 sales, hobbled by a customer-hostile freemium model.

Who says people even like the 40-50 dollar/game model?

That model was shoved down consumers' throats by console manufacturers because there was no real alternative before. 

It's like if there was a hamburger joint and they said "well burgers cost $10 each, and we don't do french fries". If that was the only hamburger joint in your town, you'd have no choice but to go there. 

Now there's actually a choice. Not every consumer wants or needs to pay 40-60 dollars for a game. For a lot of people 5 or 6 $1-2 games keep them occupied for the 20-40 minutes of free time they may have during their busy day.  

Smartphone games are a fad, but gaming on smartphones isn't. Remember when facebook games were huge? That's equivalent to the app games we have today. Eventually a new gaming sensation will steal these people's attention and they'll be gone for good. People like us though will be playing huge legacy games or streaming gaikai.

Phone games id say are fad driven but no gaming is a fad.

Plus who the hell is gonna spend 300 hours on a phone game like ido on GT.

The OP is clearly OMHO delusional if he thinks smartphones or tablets or phalets are simply going to disappear. Indeed, one day they'll be replaced (likely by tablet hybrids) but the gaming culture they have developed has already eclipsed the console market big time and isn't about to vanish.

Nor did it appear out of thin air, a lot of these people were play facebook games or PC flash games, it's merely the convinience of now being able to play anywhere at anytime has caused this already large market to explode.

Will tablets replace gaming consoles?

Yes. Absolutely. Or rather, they will merge into the same device but that's still a ways off.

WiiU/PS4/720 are not the next generation. Except for sequecial order.

Sony already said it themselves, "The gamer [not the living room] is the centre of the [gaming] universe"

The next gen are games that follow you. You'll play them off the TV at home - console-wise - but then take them with you on your mobile device. WiiU, PS4 remote play and the phone functionality of Beyond all hint at this future but none of these are there yet. Eventually, you'll be able to 'flick' your game from your phone to your tv/PC/tablet and back again - similar to WiiU's gamepad - and continue gaming as suits you in the moment.

We are not there yet but BlueStack (Android) already allows this functionality to happen in a limited degree. Gaming tablets like GameStick, WikiPad, Razor provide a proper medium to carry games with you. No one has put it all together yet. But someone will. Whoever does this first/best will win next gen and there won't be a thing the Big 3 can do to stop them (unless one of them does it first).

I have a few issues with your logic.

1. Mobiles won't be getting left behind by consoles for one reasion: There's a new "generation" of smartphones and tablets every year. Nvidia's Project Shield is already putting out console-like graphics, and, thanks to the rapid development of mobile chipsets, it's estimated that Tegra devices will surpass the Xbox 360 by 2015. The Wii U will be next. Sure, the games might look worse than PS4 blockbuster titles, but the difference won't be big enough to sway the average consumer.

2. Mobile games continue to grow more varied and more complex. At the same time, more and more consumers are switching over to mobile gaming. Also add to that the fact that the majority of developers are working on mobile games at this point, so there'll always be something new to play. Considering all this, and the fact that the Angry Birds "fad" is still lasting, the thought that mobile gaming will be dying out any time soon seems like purely wishful thinking.

3. If you've read up on many of the new "next gen" engines, they all have one focus in common: scalability. They've seen the growing mobile market, and they want in on a piece of that pie. Soon enough, we'll probably be seeing console games getting delayed, cheaper, releases on tablets. Maybe it'll start with yearly sports titles like Madden and Tiger Woods, but soon enough AAA titles will start appearing on tablets as well. There'll be no saving console gaming at that point.

Biggest fail of phone gaming is many of us game on +50 inch screens, phone game will never match the experience of 3am 60inch screen surround sound while on my 4th redbull.

your opinions are wrong.

I think they are here to stay, and will definitely eat into the gaming market which is why consoles need to try to appeal to more than just gamers if they want to be successful.