The game console will never die, but calling it that certainly will. When people spend far more time doing non-gaming activities, it behooves Microsoft and Sony not to call it that anymore so they can try to grab a wider audience. They want people to rent movies, buy TV shows, listen to music, download apps, etc... in addition to playing games on this device. In fact, if you could record and watch live TV, the cable set top box would be dead (and that's the real market they are trying to go after).
With the apparent success of the $99 Xbox 360 w/ subscription, we are going to see Microsoft push that model further with the next Xbox. I'd say buy the console for $200 (high-end SKU), then for $30/month for at least 2 years, get Xbox Live Gold, Xbox Music, and maybe 1 free movie rental a month. The last part clearly indicates it's a media machine, and people have gotten used to paying monthly bills for cellphones and stuff like Netflix and Hulu Plus. Considering the Xbox 360 isn't that much cheaper now than it was when it launched ($299 & $399), the only reasonable reason not to buy a new console immediately is because it lacks any tangible functionality over the old one (back when they only played games). Oh, and the next Xbox must be FAR better at multi-tasking. Taking 3 minutes to boot an app is ridiculous. NEEDS MORE RAM.