Actually, the GPU in PS3 (RSX) was smack in between a 7800GTX and a 7900GT (closer to a 7900GT, though). The GPU in 360 (Xenos) was phenomenal in that it was faster than X1800XT that finally became available that November. Xenos actually had more advanced architecture than the X1900XTX that came out a couple months later (unified shaders ALA R600, rather than just expanded shaders ALA R580). Imagine, the X1800XT that was delayed past the 90nm Xenos, actually launched with a MSRP of over $500.
Can you imagine a console being launched with graphics more powerful than a $500 video card today (i.e., HD 7970)?!? That's why Xbox360 was absolutely phenomenal for its time circa 2005. Not even RSX graphics in the PS3 released a full year later could actually beat Xenos. It was quite a revolution, and the reason why we continue to see impressive games on these platforms today.
However, the shift will be directed towards 3DTVs. Stereo3D technology needs leaps and bounds greater graphic processing power, along with true 1080p rendering with full antialiasing. This, combined with far greater tessellation (polygon) and texture/pixel fillrates, requires several magnitudes of orders greater processing power.
Sega Dreamcast was able to make games look nearly as good as PS2, or even the Wii, although the PS2 was like 10 times as powerful. It was the revolutionary leap of unified shader architecture (DX9.0"d"
that marked such a revolution. However, I have the feeling that with the upcoming consoles, it will just be more of an evolution rather than a revolution (like the PS2/Xbox/Gamecube just being an evolution over Dreamcast).
The Wii U definitely needs 28nm-fabbed HD 7750 graphics (based on the super-efficient GCN architecture), even if slightly underclocked. Xbox 720 definitely needs 28nm-fabbed HD 7850 graphics (roughly equivalent to HD 6950)- but much better if Microsoft truly hopes for it to have a chance against Sony's PS4 that will most likely come out later on. MS probably knows that Sony will be more aggressive regarding the graphics, especially since MS won't be implementing such cutting-edge graphics as they did with Xbox360's Xenos. Sony is definitely going to want to make sure that PS4 has a clear advantage over Xbox720 regarding the gfx. I wouldn't be surprised if Sony indeed jumps ahead to 20nm graphics that is even more powerful than today's HD 7970, just to try to establish a clear sense of dominance like they always wanted to (for the PS2, it was the overall-especially with a headstart before Xbox and Gamecube, for the PS3-which came out a year behind the competition-it was Bluray, and for the PS4 which would also be late in 2014, it would have to be the graphics).
BTW, Microsoft already has the Kinect (and would likely be integrating Kinect 2.0 with Xbox720 right at the start), so Sony would have to do the same with copying MS this time around rather than copying Nintendo's Wiimote the last time around, by designing the PS4 to have built-in Kinect-like capabilities.