A mess-up at E3 doesn't mean that much. The system still has Final Fantasy, Metal Gear Solid, and practically every other big franchise people want to see. I think Sony is going to lose a lot of marketshare this generation, but it's up to Microsoft and Nintendo to capitalize on Sony's failures. I'd say Nintendo has, big time, but I find myself still totally underwhelmed with Xbox 360. News is starting to come out of the press conference and it seems like the only big thing is Halo 3 - a VERY predictable game that won't be available for at least a year. Boring.
If Microsoft doesn't step up, Sony will continue to beat them. I'm still not sure where Nintendo stands in all this, but I see it as a big gainer, at least.