The next generation of video game consoles should start in 2011. (Give or take a year). It takes about three years to develop a video game console, so work should be ramping up at all three video game manufacturers.
Nintendo's best course-of-action is pretty clear: Do a slightly souped-up Wii. Perhaps with lots of SD-RAM for downloadable games. Probably with low-end HD resolution graphics. Definately with an improved controller (for example with the recent gyroscope slice built in.)
Sony and Microsoft have to decide whether to aim high or copy Nintendo.
Today a strong rumor has it that Sony is polling developers to see what they think of a PlayStation 4 that is similar to a cost-reduced PlayStation 3 (same Cell, cheaper RAM, cheap launch price.)
That makes sense as Sony has had problems this generation due to the high launch cost of the PS3. The drawback of this scheme is that it does nothing to make the PS4 easy to program.
In the last few weeks we've seen other rumors that Microsoft's being courted by Intel to put the Larrabee GPU in the next gen Xbox. I think that if Sony aims low, it's likely that Microsoft will be foreced to aim low too, which would make a Larrabee GPU unlikely. That makes me sad -- in my dreams, I'd love to see an Xbox 4 that used a quad-core x86 CPU and a 16-core Larrabee GPU.
Well, the great thing is that we'll know for sure, in about 3 years. :-)