The only thing holding back PC gaming is PC gaming. I was a PC gamer for a long time, until GTA4 came out. I'm not missing it. Video drivers are an absolute disaster, with constant hot fixes for new titles. Nvidia and AMD/ATI have exceptionally low quality control. It seems all they care about is winning the benchmark war. Gone are the days where I've had to deal with problems like the audio stutter in Half Life 2, game crashes, graphics corruption, patches that break working games, drivers that introduce bugs on old hardware with games that were previously playable. Nvidia and AMD don't seem to understand the concept of regression testing. I'd even argue that the quality of the hardware is incredibly low, even if the price tags are high. Anything that doesn't have a lifetime or three to five year warranty is not worth buying. Even with problems like RROD and YLOD on 360 and PS3, I'd say it's an easier and cheaper problem to deal with, and you get a good warranty. I don't have to deal with hardware conflicts or driver conflicts anymore.
Here's a good example of the oddities of PC gaming, which make things tough on developers. I used to be in the Guild Wars alpha. At some point they released a new build for one of the free weekends. There were a good number of users reporting a crash that they couldn't figure out. I was one of the only Alpha testers affected by the problem. The game would crash when loading between zones. I reported the bug numerous times, and was in direct contact with one of the devs to try to work it out. Eventually he figured out that the bug was caused by running Ventrillo in the background while using an AMD processor, and somehow that affected the way level geometry was loaded, which caused the game crash. I never got anything more specific than that, but he said it was the weirdest bug he'd ever seen. They fixed it, but it was hard as hell for them to track down and speaks to the stability problems of the platform as a whole.
Devs can pass the buck and say the bugs are not in their code, but in the end, they're releasing a game on an unstable platform, and as far as the consumer is concerned the game and the platform are the same thing. If I want to play a game, I don't care who's fault it is that I can't play; I just want to play.
And don't even get me started on the imaginary upgrade cycle. Unless you are a frequent updater with a lot of money, updating components ever three or four months, you pretty much ended up replacing your entire PC. Want a new video card? Well, it looks like the bumped the AGP bus to a new spec, or switched over to PCI Express. Oh, your motherboard doesn't have that? Well you'll have to get one of those. Oh, your new motherboard needs different RAM too, and it has a different CPU socket so you'll need one of those. Not working? I guess you forgot that your new components need more power, so you'll have to buy a new power supply. Nice cheap upgrade. You got to reuse your case, your keyboard and mouse and your hard drive.
Things might be more stable on the upgrade front now, but I haven't been following it for a few years now.