Of course it can be further away than 1-2 years, game development cycles of 3 years and more are not uncommon anylonger.
I agree with Ostepop we will not see the next generation of consoles from MS or Sony in 2009, nor in 2010 IMO.
If for simplicity we assume that the 360 and PS3 are selling the same numbers monthly world wide, i.e. the PS3 numbers in Japan and Europe make up for the numbers in NA. Going forward an intersting question is will the sales numbers peek at the same time during their life cycles or will one have more stamina than the other?
You could argue that the 360 has a higher installed base from the start that will help it remain competetive and attractive among developers just as the PS2 had.
You can also argue that the PS3 has more potential in the long run through more processing power, standard hard-drive and the blu-ray DD, which games should start to take better advantage of within a few years.
Within 3 years from now the price difference of the two consoles will be very small. I think it is very hard to make any assumption of that one or the other is bound to be a clear winner within the HD gaming space. We don´t know how long Nintendo will stay out of HD gaming either, one thing is for sure, they are not in a rush to enter that business as things are going right now. They are waiting for the installed base of HD TV sets to reach high penetration levels, while the 360 and the PS3 are helping building that base of HD TV sets. It is very obvious what is most profitable at the moment. I expect their challenge will be to leverage the Wii HD in 2010 or 2011.