The CPU side can definitely be matched but packing in the GPU power would take a lifecycle at least as long as the last console generations.
Personally I'm dismayed by the level of CPU performance found in the new consoles. Last generation quickly ran into a roadblock posed by the limited memory capacity but I think developers have been hamstrung by a lack of CPU horsepower right out of the gate. This is coming from a total layman who can only interpret benchmarks but I know that Jaguar's IPC is very weak compared to every other modern x86 design and the power of a single thread is a huge limitation no matter how much you try to program around it.
Ever since the PS3 games are very good at taking advantage of multiple cores due to extensive use of data oriented design. Consequently in my experience single-threaded performance isn't as important as you might think.
PS3 games made everyone learn to take advantage of multiple cores, but the incredible single-thread (more like thread and a half with careful manual scheduling) performance of the SPUs should not be discounted.
I think the CPU story is pretty reasonable this console generation. You trade single thread performance for a more powerful and space efficient design. It is just a lot easier to optimize the CPU than the GPU especially running on a gaming focused platform so console makers always trade CPU for extra graphics power.
Personally I'm dismayed by the level of CPU performance found in the new consoles. Last generation quickly ran into a roadblock posed by the limited memory capacity but I think developers have been hamstrung by a lack of CPU horsepower right out of the gate. This is coming from a total layman who can only interpret benchmarks but I know that Jaguar's IPC is very weak compared to every other modern x86 design and the power of a single thread is a huge limitation no matter how much you try to program around it.