Here the way I see things unfolding for the PS3.
It will launch towards the end of 2006.
I suspect the final PS3 CELL CPU will be dual core fabbed at .65 nm. It will contain 2 PPE's and 16 SPU's at 4 Gigahertz. The RSX GPU will have Rambus XDR2 (microthreading memory) with a 128 bit controller. It will also be fabbed at .65 nm and have at least 32 megabytes of eDRAM.
The gamepad will have some new type of features like Nintendo's Revolution. Gyro-scopes or whatever.
Sony will continue to re-write the rules of how the console business works like they did with the PS2. The cost will be higher than than traditionally launched consoles, but the increased multi-media firepower will be marketed effectivley to consummers.
They will market the hell out of 1080p for numerous reasons. Blu-Ray will have an easier time supporting 1080p compared to HD-DVD because the capacity per layer is higher. All the new high-end TV's from Sony/Toshiba that have "CELL" will probably target 1080p. Toshiba's 50 inch SED certainly will achieve 1080P, and that is the most likely place Toshiba will place CELL to start off with. Also since Xbox 360 targets 720p, they can hype the PS3 targets 1080p.