The problem with using a PC is if you want to run the latest games in a high resolution (or now HD) so it's similar to the graphics on the ps3, etc, you need the latest hardware which is super expensive.
I'll have to disagree here. Yes, computer hardware will be more expensive, but it currently will beat console graphics, as long as you have a good enough monitor (a yum-cha 17" LCD monitor is no longer enough).
I just built a new gaming computer last month for $1200 - Consider that a PS3 is ~$500, and Xbox 360 seems to run around the same. This is discounting that HDTVs are generally expensive enough to make up the difference, even adding a good monitor to the computer.
Meanwhile, I can run office sofware, have a 500GB harddrive(no wimpy 20GB), run all sorts of software, etc...
Most high end video cards cost as much or more than the most expensive consoles...and that's not even taking into account the other hardware needed to go along with it.
Top end, I'd say. My graphic card cost half of what a console would, and I'd call it 'second best'. I buy cutting edge, not bleeding edge. Of course, the top is out of sight - It would have been easy to spend $5k for my computer for ~2X the performance.
I understand the newer PC games have much better graphics and require more power, but my system is still very outdated for a gaming system. You will typically get at least 5 good years of gaming out of a console which isn't bad at all. The PC is still better for certain types of games though. Of course now you can get keyboards and mice for consoles too so that somewhat evens the score I guess.
They are merging, I'll admit. With HDTV you have more than enough resolution for running office apps if you want.