For those saying that there is no need for a new generation of hardware, realize that most AAA console titles can't even hit 720p at 30FPS on the 360 (See Halo), let alone 1080p30 or better yet, 1080p60. With the same assets and amount of effort on the developer's part, a new hardware generation would easily allow for 1080p60 as the default, with anti-aliasing. That's aside from much more robust programmable shaders, faster Blu-ray drives, hopefully 16-32GB of solid state storage for texture/asset caching, and in the case of MS, integrated 802.11N and finally eliminating their "core" version from the marketplace so that developers will be able to rely on all users having secondary storage, expanding the market for DLC and on-line features significantly.
6 years ago very few consumers could afford HD screens, certainly not above 42",and 1080p wasn't yet ubiquitous. Today we can buy 50+ inch 1080p 120hz LCDs or Plasmas for well under $2k USD. I think it's definitely time for a new cycle.