That is the point, upgrading.I mean games that these cards are going to run, consoles gonna run too and in case of PS3 even better.
As far as losses to Sony are concerned, they have estimated a 3 year time cushion for the console to break even by the shear number of sales.
U must remember that PS3 is considered by many developers to be rather difficult to program on.Architecturally,its GPU power is on par with the now measly 7800gtx.(Though the theoretical performance is abt 1.8 TFLOPS for SPE's+gpu,but u know that TFLOPS doesnt really matter,as u see in GTX 280 vs 4850/4870)
The console makers generally sell it at a loss or minimal profit and recover money from the developers.In short,they get money from the developers(for using the SDK's etc) and a percentage of the profit from every game copy from that console being sold.That's why they provide it at such a cheap price(to attract more customers as they possibly can).
When u consider a PC's cost,u must take into account its other abilities(watching media,encoding,browsing,educational......and the list goes on.If u buy a decent PC (HTPC) it'll probably cost u abt rs 35K (say), then by buying a decent Gpu (say 9600gt/gso/3850), u'll be able to enjoy games.So,in fact by paying an additional 6/10 k u can play games whereas for consoles u need a good tv(supporting 720p at least).(Talking abt casual gamers here)So the price advantage can be debatable,u see.