Looking at overclockers.co.uk, the prices seem to be the HD7770 at $135, and $80 for the processor. That's not counting the motherboard at $60, $75 for the RAM, $50 for a case that will be bigger than a console case and won't fit under your TV, $75 for the PSU, $60 for the hard disk, $20 for the wireless adapter (and that's a dongle, not internal like on the PS3), $6 for the bluetooth (again, a dongle, it's internal in the PS3), the Windows tax at $120, $30 for the controller., $75 for blu-ray.
That's to get something roughly equivalent to the lastest consoles, it adds up to around $775, or about Â£520 at $1.50 to the pound. If the consoles cost that much they're dead in the water.
I'm not even including the cost of kinnect, which I'm not sure is even available for the PC. Granted though, the games on PC are dirt cheap, consoles have no Steam sales.
But to say you can game on a PC for $40 is laughable. For a start, most PCs these days are laptops not desktops, so they don't even have room for those new giant graphics cards with multiple fans.