Smashchu2, I really think you have a couple of good points, but I do disagree with you about a few things. First, I don't think the PS3 is doing as badly as you do, and I believe in a longer generation than you do, apparently.
Considering the fact that the PS3 is in third (last) place, it's doing outstanding. It is and will be the most successful losing console of all time in terms of sales. It has a great standing with its customers as well, and shares an amazing library of games with the xbox.
My end of generation projections puts the HD consoles at a maximum of 140 million, and I have previously predicted that they will not sport more than a 10 million gap between them. Naturally, I have no real basis for this, other than a simple estimation of population caps.
Also, while your arguments about price are mostly fair, the extreme price difference between the consoles is something never seen before, and that might skew the picture you paint a little bit. While I do not believe a $200 PS3 would sell much more than at the current price, I would not discount the possibility.
I believe Gran Turismo 5 and Final Fantasy XIII will indeed push a lot of PS3's in Japan. But about half a million consoles more or less is not going to noticibly affect the outcome. And outside of Japan, these games will have a minimal impact on PS3 sales. God of War III on the other hand, will most likely not sell any measurable amount of systems.
As I said Smaschu I agree with you on many points, most importantly the customer orientation that is apparent in your posts, but I have a much more positive outlook on both HD consoles than you do.