The Linux console still has a future. Perhaps Linux consoles could have:
1)A highly specialized distro, tailor compiled and configured for the console. Out of the box, boot times are tremendous, and performance is better then out of the box PC distros.
2)Perhaps you can go one step further and have "dual boots". You store two versions of the console Linux OS on the harddrive. One version is designed solely for running the game, the other version can run games with a minor performance drop, and word process and surf the net.
3)PC compatibility. Imagine being able to play most Linux PC games on the console. In addition, there would be some linux console only and dual Linux PC/Linux console games, that could benefit from the special coding, hardware, and architecture of the console(the dual games would be coded to work a little different on the console version).
4)Linux software! Your Linux comes bundled with all sorts of freeware goodies.
5)PC upgradibility. Perhaps you would be somewhat limited in how you can upgrade your console, but the possibility is still there. Stuff like the CPU, sound card, and video card would have to be standardized, so you coulden't just pop-in any old upgrade. This allows the console to get a performance boost that a PC don't have. I can see things like RAM, harddrive, and modems being changeable. Also, things like controllers, keyboards, mice etc. The biggest advantage is that if it works for a PC, it will probably work for the Linux console. Any hardware that is certified by the makers will have automated kernel recompiling instructions available from the console maker's website for download.
Now about kernel recompiling, I know you don't have to do this, but it would mean a performance boost if you have the whole OS specfically optimized for one particular set of hardware.
So all in all, a Linux console has alot of potential.