I don't quite see why people are touting graphics in the distant future or the PS3's '10-year lifespan' or whatever. What will computers look like 10 years from now? What did they look like 10 years ago? I can tell you one thing: they'll make all three of the consoles available (or not available) today look like utter crap, in terms of hardware specs. It's been 5 years since GCN was released, maybe 6 since PS2 was released, and the stuff you can play on a decent computer today makes each console look quite dated.
If Nintendo waits 8-10 years to put out a new console, it's doomed regardless...which is why I agree we'll probably see a Wii2 in 5 or less years, or whatever next-generation solution Nintendo decides to cook up next. Honestly, in light of what even mid-level computers with hardware upgrades can put out these days, I think that the most compelling arguments towards consoles in general revolve around the aspects that PCs can't easily duplicate: input mechanisms specialized for gaming, easy setup, same-room multiplayer action. These are aspects upon which the Wii is competing.
Also, graphics improvements will only continue to grow more incremental. It's easier to see the difference between a 100 and 1000-poly model than between one, for example, that has 10000 and another with 5000 or so. I think that art direction is going to play a larger role in the future, an aspect which is less dependent upon hardware capable of rendering more and more photorealistic graphics, and more dependent upon the creative vision of the designer.
And I really hope they don't get backlogged into spring...