But with Fusion and and Intel's plan to integrate CPUs, how much more powerful are x86 CPUs as we know them going to be? Are 8 and 16 cores going to make it in consumer devices? What are the incremental benefits of additional cache?
I'm sure 8 and 16 cores will make it into consumer devices. The real question is whether it will ever enter the mainstream. And my tentative answer to that is 'No'. Or at least not before the price premium is basically zero.
After quad-core, what you're likely going to see for the mainstream (i.e. anyone not using PCs for games or as a 3D workstaiton) is complete and utter commoditization, IMO. There is just no workload that could benefit from more outside the gaming market, and the next-gen Windows won't tax hardware as heavily as Vista did. Accelerators are also mostly useless. The mainstream should be able to understand this trend in a couple of years.
I think the fundamental problem you've got is there still *are* users who need more performance, but they aren't the majority. So there are good reasons to keep up with Moore's Law in one market, but it's hurting you in the other. Your only chance then is to reduce the price of the low-end PC and hope you can expand the market that way, compensating the other loss. This is certainly the direction most major players are taking.
However, it is also worth not being too aggressive in terms of timeframe for that transition. We are still talking many years out here, let alone because a high-IPC x86 quad-core won't really become very cheap until 22nm. However, I could easily imagine single-chip integration of lower-IPC solutions as early as 45nm...
By the same token, are ARM cores so small is there room for them to improve performance at a faster rate than the x86 processors with process migrations?
Yes, they're really really small. The Cortex-A9 cores you'll see used in chips around 2009 (and final products in 2010, presumably) are probably slower on an IPC basis than Pentium 3s, and I doubt you could clock them much higher than the latter on 65nm even if you optimized the layout around that! So you're literally talking about 10 years old tech here...
So an ARM tablet right now looks iffy, but I bet you could get some pretty decent performance, especially with a good GPU, and amazing battery life in the not so distant future.
Why not just use Intel's Silverthorne or something from VIA and be done with it? You don't need hundreds of hours of battery life in a Tablet... ARMs are just too slow and 'too' cheap for that market, IMO.
The problem is if you want an ARM core to be viable for that market, you'd need to develop it from scratch for that. It's just not worth the effort IMO.