Quad core mobile chips are already in production and PS3 capable mobile GPUs are 6 months away (ARM Mali T-658).
Why is a console, a console and not simply a power/cooling/connectivity dock for a suitably powerful mobile device ? Id's flagship game, RAGE, has been supremely playable on an iphone for ages now.
Consoles like PS3 and Xbox already lag desktop-grade video hardware by 5-6 years, yet have a large market - so why cant the same be true for mobile hardware ?