I think there's a lot of life left in this gen. Generally a new generation begins because there's a significant advancement in tech that someone can put out a system that does stuff old systems simply couldn't. However we've now hit the point of deminishing returns. Better graphics won't make a difference. Hell Wii is winning with SD graphics....
It looks like Sony & MS both want to extend this gen with peripherals like Natal and the Wand. Also, frankly, both need to or it'll just be a big loss for them. Hell, at this point it's a complete write-off for Sony, but the more they could do to minimize the loss the better.
And Nintendo's happy to keep selling systems as long as they keep selling. NES and GB were both around for 10 years.
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