Once again, yeah, Sony's execs fails at being other than cocky and ill-informed; the N64 and PS1 both came out (in Japan) in 1995, and competed against each other, where it was the case that the N64 was vastly more powerful than the PS1. Yes, a lot of people went from the N64 to the PS2, because the Game Cube simply didn't have as good a game library as the N64; it might've had more games overall, but vastly fewer "amazing" games. The PS2 had a crazy-huge library, that has managed to have a slew of great exclusive or semi-exclusive titles from almost the start.
The PS3? Not so much. I'd like decoppel to count the "blockbuster" titles himself for the PS3. When you go down to exclusives, you're left with, uh... Resistance, Resistance 2, Motorstorm, Uncharted, and MGS4. Compare Wii, which has a bajillion mega-selling titles with the word "Wii" in them, as well as Smash Bros. Brawl and Super Mario Galaxy, both of which over double the sales of Resistance, as well as Twilight Princess, Red Steel, Umbrella Chronocles, Metroid Prime 3, Super Paper Mario... And then comes a lot of non-exclusives, such as how the Guitar Hero and Rock Band games have sold FAR more on the Wii than either the Xbox 360 or PS3. (only the PS2 sales compare) Then, of course, is the Xbox 360's library... I doubt I need list its own "blockbusters." But it's safe to say that the PS3's library is pretty paltry by comparison, and has lots of games one couldn't argue sold big purely because there was nothing else to buy on the platform.
All told, Sony either fails to see the difference between the PS2 and the PS3, or are pretending they don't for fear of their stock prices plumet. (oh wait! They already were dropping even before last fall's stock market crash) The PS2 was quick out to sell a lot of units, hence it got a lot of developers, and hence a large library, which then helped continue massive sales. Plus, it started as a pretty cheap and good DVD player when those were still NEW. The PS3 was late, didn't offer much for a library, cost too much, and as a result, sold poorly. Now, Sony can hardly hold any exclusives, (GTA4? Oops! FF XIII? Darn!) still has pretty anemic sales, and the Blu-ray player isn't quite as enticing, as Blu-Ray isn't the ludicrous upgrade that DVD was over VHS. And by now, it can no longer wow with graphics, since compared to the likes of Crysis, even inFAMOUS looks positively quaint.
All told, I don't honestly see much of a "Wii owners upgrading to the PS3" within its standard lifespan. If they do, it might be for a cheap&powerful Blu-Ray player when it's already got a good market. (such as when the PS4 is out) Much more likely, if Wii owners don't ALREADY have a more potent system on hand, chances are I'm willing to bet that they'd go for an Xbox 360 instead, due to its impressive games library. And in such cases, it wouldn't be so much of an "upgrade" (Wii owners generally don't want potent console graphics) but rather simply to access the large range of games unavailable for the Wii; the 360 has a vastly large library than the PS3, including a number of PS3 titles not available on the Wii (like GTA4, COD4, AC, BS, R6V...) as well as what is frankly a larger and more-compelling list of exclusives. (Dead Rising, Saints Row, L4D, ME, GoW/GoW2, and, of course, Halo)
All told, I consider it a done deal that the PS3 finishes this generation dead-last. It already gained the benefit of both major things that could boost it, (the victory of Blu-Ray over HD-DVD, which spiked sales temporarily, and then the release of MGS4) so I predict the Xbox 360, thanks to its library, will likely widen the gap between it and the PS3; chances are no more big-name titles will come as PS3 exclusives, as the PS3 simply doesn't have the 75% market share the PS2 had, but rather 22%. So this will continue a vicious cycle, the exact opposite of what helped the PS2 so much. As for the Wii... They could probably cease production today, and with well over 50 million units sold, possibly never be surpassed by the PS3, which has a mere 45% of its quantities after nearly 3 years out for each; that means it'd likely take more than 3 years for the PS3 to catch up, by which time Sony might've instead bet on a PS4.