Both 360 and ps3 need a hdtv to be played well, it's possible connect to a normal tv but you won't notice great diferences between the last gen and it gets impossible to read sometimes, and some games just run with hdtv(like Oblivion). 

Perhaps. I didn't buy a 360 until I had an HDTV.
But a game console that puts an HDTV to good use is a huge draw, and I wouldn't be happy with low res graphics on my HDTV.

The average consumer most likely doesn't give a damn. I would assume that they buy, then either get a HDTV/Monitor Huck-up or get rid of the system because they don't like it.... still adding to LTD sales of the system.

umm it works fine in SDTV but people love having the option of going HD if they ever get a HDTV. That is one advantage about the HD consoles

I had a SDTV for about a year with my PS3 until I decided to buy a HDTV.

of course it is. Not being able to use the console's graphics when it's its main selling point is a drawback.

but the thing is TVs under 32 inches that are not HD :p I have friends playing 360 on a 17" screen and they are fine with it.

What I love though is people saying that their graphics are so awesome when they have a small screen...

Going to HD was absolutly needed for consoles otherwise we would be talking on pc gaming forum here :D

Besides X360 will work very well on any pc monitor and you can get those in 22" size at 150-200 $.

The average consumer buys a console for it's games.. The resolution won't matter

Maybe a bit, but I think plenty of people happily use SD TV. When 360 launched in particular many people I knew were hooking it right up to a SD TV.

That's bullcrap, and probably a mistake in their marketing to focus so hard on calling it HD consoles. An HDTV gives you a cleaner image but it's not needed to appriecate either the game or the graphics unless they've f***ed up the onscreen text.