The purpose of the X-Box (originally "the Direct X box") was that it was a console outlet that would allow developers to build toward PC and console games at the same time. I think the fact that most people do not buy a sufficiently advanced computer when they can buy an X Box (or other console) is a pretty good indication of why Scorpio will probably not belong to the last console generation.
People also don't want to update computers at the rate game makers wish they'd upgrade HW capabilities. The fact that Windows XP lasted so long is another indication that most people are willing to stick with "sub-par but stable" for a long time.
As long as hardware is a factor, it will be cheaper to make special-use machines -- separate from the PCs that everyone is storing their digital lives on -- than to ask people to upgrade their PC. There are a lot of games with simple requirements that don't need much in the way of HW upgrades over time -- which is why I would expect, say, Nintendo to go console-less before playstation or X-Box do -- but as long as there's a gap, there's opportunity in a console market.