Will an HD 7870 with FX 8320 have better graphics than an Xbox 360 or Playstation 3? Assume this on a 32" 720p HDTV. How would the PC setup compare (most likely) to the new generation of consoles? (Xbox 720 PS 4 Wii U)
Absolutely an HD7870 is better. The PS3 and Xbox360 are almost 7 years old (think of a 7 year old video card vs a video card that is 1 year old, which 1 is better?). Plus the HD7870 is a top performer that can achieve 60FPS at 1080p in most games (consoles mostly do 30fps).
It seems what you are asking is if you will be able to play good quality games on your TV using your PC. Well, yes, the graphics will be way better than on a console. However, keep in mind that PC games that support a controller will sometimes be horrible ports of console games (think of Dark Souls: Prepare to Die). So, all in all, if you want to play PC games on your couch with a controller, you can, but consoles have a larger variety of games and most games are first developed to run on consoles and then ported to the PC.
As for the new consoles, no one knows for sure, but from what I'm hearing, the PS4 "may" have a quad core 3ghz AMD APU (cpu + integrated video, a 6550D) and a 7660 discrete video card for crossfire setup. If this is true, the HD7870 will completely outperform a 7660 + 6550D combo. Consoles are designed to be cheap and mass produced so that everyone and their illegal immigrant cousin can afford one
Cheap + mass produced = weak hardware