One of the main reasons why Arcades survived so long in Japan is because Japaneese people (often) favour new and/or unique gameplay experiences. This isn't saying they don't enjoy their "installment" games, like Final Fantasy, but there is far less of a focus on this in Japan as it is in North America.

For the most part what the PS3 has offered the Japaneese gamer is a lot of "installment" games and games that are designed for a "Western" audience ...

 So true, same can be said about most of Asia.

On top of that, Atmosphere is a big factor as well. Where as in western arcades, I've only seen upto 8 people hooked up to a single game on multiple machines (daytona) and aside from that it's only 2. In Asia, I've seen gundam arcade games with up to 10, virtua tennis (4 player doubles), betting simulators, card games (with a virtual poker table), soccer games with up to 6 etc. This causes a huge atmosphere when you play casually with mates, and is why kids go there at night or after school, because there is such a huge buzz from playing well in front of people (Boy did I love ripping high schoolers on Initial D while I was over there).

Wii recreates that slightly, as it is best enjoyed with groups. With PS3,  the only thing I've seen have a Wii level of group interactivity is Soccer games, namely Pro Evo: W11. 

PS3 hasn't taken Japan like PS2 did because they've seen that experience already (like Happy said) and to be honest, their arcade scene is still strong and the PS3 doesn't offer much on top of what was given to them game play generation for the last two generations.

 There's also the constantly on the go culture in Japan hence why the DS is so popular there.