PS4 was already more powerful AND cheaper than the X1, which is win win. It's powerful enough with room to grow, more importantly it has an intelligent design due to Mark Cerny being a god. 

Gamecube with the exception of the mini discs :(

There are bigger bluray disc sizes.

And a more powerful GPU and CPU would hurt it in which way now?

Balanced is just a nice word for compromise.

I actually think the Market ws completely ready for 500-600 dollar system war.

Remember the Xbox One was selling decently at 500 dollars, I think the market was willing to pay for that. Notice when they cut the price down to 400 there was no long term improvement in terms of xbox sales. It was a software issue probably more then it was a price one. If Sony went for a 500 dollar system I don't think sales would be vastly different from what they are now, maybe minus a 1m.

To be honest sony was never really in the position to gamble with money though, so I think what they done with PS4 was smart. I think MS should have delivered beast, it would have worked more in their favour especially in europe where they cannot compete head to head. They could have carved out a market with emphasis on power.

They should've just talked to each other to both bring a $600 console.

This is actually a good example of competition hurting consumers. Both were so bent on beating the competitor's price that they started to cut corners. I mean we're talking about a long term investment here. If you cut corners from the beginning you will be stuck with it for years.

This is the first generation where a stop gap hardware update seems plausible, again I think its something that the market is ready for. Maybe we'll see one of the two release a new spec PS4/X1 around 2016-17.

I mean they kinda did it for the 3DS^^

If Sony brings a 50% more powerful PS4 I'll be the first to preorder.

I don't know about the 360 but the PS3 was not balanced at all in terms of CPU power. The PS3's CPU in benchmark's is actually only 20% worse than the PS4 CPU. It's just because it was made by IBM and was a labarynth to code for and was basically not build for gaming at all. Sony saw high numbers and was like "Ooo lets go with that". 

Looking what Sony first party titles already achieve it's safe to say developing on this console is easier then on PS3 which had to powerful cpu. The gpu and 8gb gddr5 ram seems a bit overpowered and the hdd is a bit slow, but furthermore it is a very balanced and easy to develop for console.