Yes, the games are less exciting and on a smaller screen, but the devices are nearly ubiquitous right now, and the games are a fraction of the price of a console game. People get used to paying $0.99 for Plants vs. Zombies, then wonder why it costs $20 for the same game on the Xbox? Add the possibility of similar bargains and freedom with the upcoming Ouya (but on a larger screen), and suddenly, these consoles and their respective games seem massively overpriced for what you get. Yes, they offer a richer experience. Is it worth 10 times of the cost of a similar iPad version? That's what consumers are grappling with right now. Add in the fact that the console makers treat their customers like garbage, and many people are saying, forget it. I'll just play games on my phone.
Or they're different markets entirely with very little overlap.