Will PC gaming ever be fully replaced by consoles? My guess is no, and it mostly boils down to one reason: input.
My two favorite types of games are still (a) strategy, and (b) shooters. And I find it very hard to see myself comfortably playing either one of them on a console.
Strategy games come in two flavors: real-time (Warcraft) and turn-based (Heroes of Might and Magic). For real-time strategy, the mouse is ESSENTIAL to move fast enough to manage everything on the screen. For both of them, precision clicking is required at least ten times a minute. Try doing that with a hand held controller. I have, when I rented Starcraft 64 for my Nintendo. It's very hard. In order to make up somewhat for this difficulty, Blizzard doubled the number of units you can select at once, and created a "highlight everything on the screen" button. This helps macro-management, but not micro. There is no good way to quickly select a caster and target a spell where you need it. With a turn-based game these issues are eased a bit -- and I know that Heroes designer Gus Smedstad has said himself that he doesn't like the twitch reflex aspect of Warcraft. But even with no time pressure, clicking an area of the screen with a joystick is extremely frustrating, and if you have to do it often enough, it can get old fast.
Then there's the keyboard -- hotkeys. Not everybody takes the trouble to learn them, but I think everyone who does would agree with me that they can't live without them anymore. So many interface issues just seem to go away when you can quickly type "H" to switch heroes, "E" to end the day, "BH" to build a town hall, "C" for a chain lightning spell. Having an entire board full of free keys, most of which have letters and numbers for quick mnemonic reference, is a huge help.
Many action type games rely on the same dynamic. Just imagine trying to play Diablo II with a joystick. I think I could handle moving my character that way, even though choosing a target from the crowd around you would be tricky. Especially with a spellcaster or bow user. But there's no way I can see handling the multitude of other tasks that make Diablo an interesting game - all the inventory managing, skill switching, character adjusting, potion guzzling, etc. We're not talking about some overly complicated game that people hate. We're talking about one of the best selling PC games of all time, and we're talking about a game that I've personally introduced to at least five non-gamers, with a very high success rate.
As for first person shooters, they're mostly unplayable on a console. I won't touch the stuff, myself. I played James Bond and Perfect Dark, two of the most highly praised shooters on the Nintendo 64. Hate them. Metroid Prime made it easy to aim, but I think it was a fluke. And in any case, auto-aiming just isn't the same as precision mouse aiming, and I don't think it will ever catch on in the multi-player arena the way Quake and Counter-Strike have.
The interface issues we're talking about are far from insignificant. Many consoles have tried to introduce keyboards and mice, but they haven't caught on. Not surprising, either. They just don't work in a comfy armchair. And one more issue I can think of that doesn't work on a console is the ability to save lots of games. You have a hard time playing Serious Sam without a dozen quicksaves in memory, even if you didn't have the aiming issues. And few console games I can recall give you the ability to just load up an old save file and begin play from any point in the game that you wish. You have to start over.
Don't get me wrong, I like kicking back and playing a relaxing game on the Cube. So far, Zelda is my favorite. But even Zelda hasn't really compelled me to keep playing it after winning. In the end, the games that have real staying power for me are the ones that are deep enough to require all the extra depth that you only get on a full featured computer.