I don't know of a 20x increase like there was from Xbox to Xbox 360 or PS2 to PS3, I'm betting more on the hardware making graphics from games like Crysis and Mirror's Edge standard. The best upgrade was the move of Console Gaming to HD, but we're pretty much there. I few minor upgrades are possible, but most modern consumers buy a 60Hz HDTV, most game devs and even hardware manufacturers will most likely only support up to a 120Hz framerate, since in the near future I don't see the 600Hz TVs coming down much if at all in price.
Then there's Smartphones and tablets. No sane gamer would consider them over a PC or dedicated console, but think of children and teens who do not buy the systems themselves. As just a game player tied to a bigscreen TV for $300+, why not just get them a tablet they can take anywhere? Why pay $60 for a game when I can get 60 apps for the same price? Simply put, it's survival of the fittest and Consoles must adapt to stay relevant. I don't like it myself, but anyone who doesn't accept this fact is lying to themselves.
There's big talk of true next Gen consoles (Wii U is finally on par with Current gen) being a lot more like a media server PC, enabling you to DVR your shows on them, order On Demand and Pay-Per-View programming, bring up you facebook and email right on the big screen... those of us die-hards love our dedicated products, and spit on tablet "gaming" if you can even call it that, but it WILL change to try to keep the mainstream market interested. Why? From a business standpoint, if you make the initial leap of buying a console, you will most likely continue to buy additional products and services for the device (think Xbox Live). One enthusiast may spend a little more than one mainstream consumer, but losing one enthusiast to gain 3 mainstream consumers is a net gain, and that's what the every business wants.