Digital distribution means that developers don't have to worry about manufacturing costs and upfront fees. Loans can be obtained from banks where a suitable business plan has been put forward, paying for salaries / development costs / licensing of engines (though perhaps not your UE3s). Promotion can be handled through sites like GameTrailers and through viral marketing, as well as through digital distribution promotions like Steam Update news. The PC is still a perfectly viable platform going into the future, without even considering the continued growth in multi-platform games (the PC is seeing more previously console exclusive games than ever before, plenty of which have been excellent).
Also, consoles are continuing to evolve. They are handling much more complex games than the previous generation and I'm sure that will continue into the next generation. There still needs to be improvements to the input devices but the PS3 already supports keyboards and with the success of the Wii we may very well see improvements made in that department, both in hardware and software. Developers also seem to appreciate more that the PC needs to be handled differently to consoles and are making the necessary changes - this will likely continue. So I believe multi-platform games will get better going into the future.
However, we need to see companies like Ubisoft to stop seeing PCs as an afterthought and delaying releases because the game doesn't stand up as well on PCs. We also need to wait for Vista / Windows 7 to increase penetration for DX10, as that has split the PC userbase. We still have a way to go but there really is no need for this perpetual gloom about the future of PC gaming - I'm having a great time with games this year and there are plenty more to look forward to.
"The price of freedom is eternal vigilance."