I'm not saying the jump / change isn't worth it, I'm just saying that the hardware manufacturers will be reevaluating their stance with hardware, and I think they'll aim to be profitable as soon as possible on hardware, as opposed to trying to get powerful hardware and make up the losses with software and services.
You can still build quite the console for $400 usd in 2011 vs 2005 tech. Ati is rumored to release a brand new tech later this year. So something based on that would be ideal for ms and it would be light years beyond xenos and the 7800 put into the ps3. Like wise a lower end fermi would be light years ahead of the xenos and 7800.
couple either of those to a more modern cpu and you got a kick ass system that most likely wont break the bank and would give a great visual leap for everyone involved including the fans