I'm really excited about these future consoles. I like games, but I really don't want to spend tons of cash on hardware to play them. At this rate, the only thing I'll have to upgrade is my graphics card
Got news for you. Those days are already here. I've an overclocked i3-530 that I've had for years, and outside of PC specific games like BF3, it's pretty damned adequate for 1920x1200 PC gaming when coupled to my 7850.
Now this proposed console CPU is a 1.6 GHz Jaguar 8 core compared with my 4.0 GHz i3 2 core + HT. Consider this to be equivalent to a 2.4-2.8 Ghz quad or so in decently multithreaded apps... Now give the jaguar a little penalty for 8 core scaling inefficiency and AMD's slightly worse IPC (my i3 is way behind Sandy / Ivy in terms of IPC, so it's much closer to AMDs IPC,) and you have 2 CPUs that should be reasonably competitive in terms of overall CPU power. This is fairly competitive in CPU power to current generation i3 CPUs that can't be overclocked.
This should be adequate CPU performance for current games. Is it a powerhouse? No, absolutely not, but it's certainly adequate to create a decent gaming experience... especially when you consider that on a closed platform developers will be able to squeeze significantly more performance from a given piece of hardware (no matter what that hardware is). In practice, this CPU may end up somewhere between the i3-3120 and an i5-3570. When you consider the pricing pressure on console hardware, and the pressure on "being green" and power consumption in general that didn't exist 6 years ago this really doesn't seem that bad a CPU to end up with.
IMO, the goal of this gen of consoles is to push the native res up to 1080p while keeping hardware prices and power consumption within reason. If my analysis is correct, and these rumors true, then I think they have a CPU in the right range to provide decent performance.
However, the more exciting thing to see with consoles is the real reason there MUST be a new generation of consoles ... MEMORY. Developers are begging for memory increases. With the most flexible of the two consoles at 1GB memory shared between CPU and GPU in an era where the WEAKEST PCs are having 2GB shared and most opting for at least 4GB shared, you can certainly understand where they're coming from. I wonder how much of the development cycle was spent budgeting every byte. How much testing was necessary to ensure that in all conditions the game never overran the 512MB the PS3 gives the CPU...
The new consoles should see significant quality increases just porting current games over and being able to use something like 8 times the texture map memory without penalty. This should, at least for the time being, make the first year or two of console games take less hardcore optimization to get to work on consoles, which may potentially free up resources for porting to PC. Also, the similar microstructure of a Jaguar to a typical PC CPU should make PC porting an easier process, which should result in better PC games regardless of the performance differences between platforms.
Let's not forget games like Skyrim, that game was HORRIBLY CPU bound on PCs in outdoor areas because the developers did a half-assed porting job. This particular game saw enough developer support to be later patched to fix the PC CPU issues. CPU bottlenecks completely disappeared after that port. Other games were not so fortunate. GTA IV was an abysmally bad port in terms of CPU performance, and the poster child for a terrible PC port. If the structure of the CPUs of all three platforms (PC, Xbox and Playstation) are more similar, we may not need that kind of extra attention on the PC side, so overall experience on the PC side may end up much better, with most games porting easily and developers who pay extra attention to the PC offering experiences more like games like the Witcher 2, where the PC version is graphically all kinds of awesome.
We aren't in a world where PC gaming is king anymore. We have to assume games will be released on all platforms. With these consoles getting extremely "PC-like" hardware, it is absolutely a win for PC gaming regardless of the console CPU speeds.