There's also the perception problem, when a new generation launches the old one is considered obsolete and about to be phased out, only the #1 of the old gen still gets new games. If Sony and MS stayed behind while Nintendo charges ahead they'd be considered obsolete, even worse if Nintendo decides they can do better than PS360 graphics for fairly cheap and the only claimed advantage of the systems evaporates.
I'd argue that the PS360 target demo considers the Wii to be obsolete. And things have changed. Yes the Wii is the number one console but it doesn't have the support that past market leaders like the PS2 had. Nobody is going to make Wii games when the next generation comes because no one is making Wii games NOW when it's current. This generation is an oddball and the old "rules" don't seem to apply.
I also REALLY doubt that Nintendo will try to top PS360 graphics. I wouldn't be surprised if next gen the Wii 2 is comparable enough to the other consoles for multiplatform development to be possible but still technically has the weakest hardware. Nintendo will aim for a low price and big profit on hardware sales. They certainly won't intentionally try to out muscle the PS3. They'll at best match it.
Personally I just don't see an obvious reason for Sony or MS to upgrade except for motion control, which doesn't require a new console. In the past we always had something outside the console realm to point to as an example of the need for better hardware. In the old days we had arcades that were always a step ahead of the consoles. Arcades are now dead and rely on gimmicks instead of hardware superiority. PC games then became the higher standard but these days most games are made for the PC, PS3 and Xbox 360 at the same time with no clear differences other than the player's preference of controller. There are still PC games that could not be done on the consoles but they're rare. MS is pushing that "Games for Windows" thing and that pretty much means Xbox 360 release.
They support HD and there's no new TV standard coming along. They're online and have hard drives, thus supporting formerly PC-only features like online multiplayer and downloads. The graphics are at a high enough quality that it wouldn't be cost feasible to go any further at this point. And we know that motion control is in the works and on the way. So what possible reason could there be to release new hardware at this time? They may still do it but I think that would be stupid because it would be such an uphill battle to sell this to the general public.
The only thing I can see is to merge portables and consoles together so you have the exact same experience on the road as you do at home. It all connects to TVs and home theatre systems and supports controllers but it's also pocket sized and has speakers and a screen and the controls bulit-in for on-the-go play. But even that might just be another SKU. You make a portable PS3 but it's still a PS3 and supports the same games as the old console-only PS3s. We've already introduced multiple models so why can't we just offer a home-only option and a portable option like with laptops and desktops?