What's to be done though? How can a system be mass market and modular? What you cite as the PC's great strength is also its downfall, how many programs have been released where the Tech Support has been:
A Pentium class processor, 256MB of RAM, a Creative Labs compatible sound card and an MS Windows operating system.
But not THAT kind of Athlon, those brands of Video Cards, THAT driver set, THIS O/S installation service pack and so on, and so on. Ad Nauseum.
As for your game examples, I surprise myself by pretty much agreeing with you as regards the state of innovation. People don't want innovation, they want to be entertained.
I have noticed that console generation times are dropping - especially if the PS3 comes through as quickly as it looks to. I think that's a bad thing, and I think that might hurt the PS3 badly, unless some serious backwards compatibility is built into it.
What are your definition of Short and Long term though? If my PSX1 goes down, well I can still by a PSONE to run my games. A PSX2 is mostly backwards compatible. How many 5 year old games are ACTUALLY worth going back to, that don't have modern counterparts?
As for the games companies "fleecing" people, well the market developed into a "Hit" based economy and the truth is that "Hit"s cost more and more money to develop. That money has to come from somewhere...