I think a hierarchy of some sort should be used.
Let's say, a 10GB hard drive, a 512MB pool of mediocre 'slow' RAM, say DDR SDRAM, then 128MB 'fast' RAM for immediate use - maybe 1T-SRAM or its successor - and then a 16-32MB scratchpad / cache on the video chip.
I doubt we'll see anything beyond 512MB main RAM... though 128MB seems too small. 256-384 seems to make sense IMO; considering what's been done on GameCube with a relatively pathetic 24MB main RAM + 16MB slow RAM, and PS2 with a decent 32MB.
Keep in mind, people, that unlike the PC world, where more RAM is necessary because of not-so-optimal coding practices (in favour of compatibility), the console world is ruled by highly optimised code, that allows you to cut down the memory requirements tremendously.
Even 512MB main RAM seems like overkill to me... again, I'd say the most sensible amount would be 256 or 384MB.