I actually think it's the other way around. Sony wanted to come out later, since the PS2 still had enough steam to combat a newcomer known as 360. Sony had to release the PS3 however, as BluRay needed it. Without the PS3, BluRay wouldn't have won the HD wars as it did, as the other players were more capable (as BDROM without BDLive and all simply was only an HD dvd (not HDDVD)), much cheaper, and had MS as a supporter with their 360 too.
I mean, look at what was released in the first year for PS3. There were no meaningful games, beside some exceptions. Until Uncharted 1 came around, it was really bleak. Resistance 1 (US launch) and Motorstorm (European launch) were the only meaningful titles in the beginning. Only much later come August 2007 came some games (Warhawk, Heavenly Sword, Uncharted), that had enough power to sell units.
Completely agreed, even by 2006 the overall environment surrounding the PS3 was a mess from the PSN to the devs tools.
Thats debatable the only time Sony came neck and neck with a direct hardware competitor was with Sega and the Saturn in 94 in Japan and 95 in the US while Jaguar and 3DO had over a yeand start.
2006 falls in line with what Sony was aiming at however yields and software learning curve and most importantly that E3 2005 was set as a place to announce a release date for an unrealistic spring 2006 to please shareholders and press expectations.
Actually Sony may have ship even latter it would not have been much of a problem, more games and mature environment would have helped but the greatest offender for the PS3 at launch was price.
I think its possible for a EE evolution based PS3 but I think that Sony also went after IBM for the chip fabrication capabilities to meet demand hence Cell but for the EE evolution we would have to eliminate IBM and leave Sony and Toshiba to design and fab the chip.
Toshiba would be here for the MIPS CPU right?
for GS evolution I really would not mind seeing something like that since I feel that GS could have used higher frequency and more ram, maybe Sony made an arcade board with a beefed up EE and GS to test scaling, EE and GS where very capable chips but the millions of dollars/yen that it takes to dream up these architectures is staggering, I feel that PS2 would have had to last up to 2008 09 for replacement to give the engineers enough time to design chips for 65nm to 55nm or better yet 40nm, I feel in retrospect that 2005 was too early to start a new generation.
I would not push that far but Sony could have launch 2007 H1 worldwide with a more reasonable pricing, MS head start would have not been much of a problem. On top of using an evolution of and architecture devs was familiar with may have yield better results in the first games and possibly more games (shorten development lifetime).
The other thing is that theoretically engineering sample prototype PS2 board was shown with running software demo in March 1999 so the design had been going for many years, I went back into old magazines, namely pre-US PSX (early 95) launch next generation magazine where Ken Kutaragi was interviewed and quoted that he believed a .250nm chip design would yield 10 million polygons per second
So years later after PS2 and after it was well known that rich kid Microsoft was in the mix in 2001 Cell design and vision was pretty much announced or talked about and the effects of that new era affected the timing of a GS follow up that would have to perform.
So from 2000 to 2005 or 2006 at 90nm engineering process to design a GSE that would still be on a 128bit bus would have to incorporate more cache and better communication to ram and have a sophisticated pipeline evolution I think maybe 64 pipes to GS's 16 and cover full hardware t&L proprietary pixel, vertex shading evolution and incorporate some type of hardware culling or deferred rendering engine.
Indeed DMP pica200 while underpowered give a good idea about what could have been an evolved fixed function pipeline. Things would have been even if as you state the GS.2 would have been designed as tile based deferred renderer.
For vertex I think that the most of the workload could have been handled by EE.2 as in the PS2.
It's really strange that actually Sony gave up on the efforts they put in the PS2 and that may be more relevant in the PSP.
The PSP ship in 2004 on a 90nm process. I tried to find information about dies size and transistors count for the two chips in the PSP without success so far
EDIT
Actually while reading stuff about the PSP I wonder if the very existence of the cell comes from the desire to mix the PS2 Emotion Engine and the PSP Media Engine Co-Processor. A posteriori it was a fucked up idea, both Toshiba and Sony would have been better with an evolved Media engine which would have been more likely to find his way to various devices than the Cell or Toshiba SPURS.
EDIT 2
Does somebody has informations about the state of the PSP hardware?
I've been through pages of google search, I could not find info like die size, process used for PSP Go, die size, etc.