Personally i think it will e a while before desktops are gone.
They won't disappear completely, but my guess is that they will be about 10~15% of annual PC sales within 3-4 years.
If we are unlucky enough the PC gaming-scene might largely die off to consoles though.
Games are already released to consoles before being ported for PCs. The economics of consoles vs gaming PCs greatly favors the former. If I was a "serious" gamer, I'd be more inclined to get a gaming console separate from my PC, which could be a slim, light long mobile life notebook w/ SSD. Add a mini-itx based home fileserver/pc for distributed music/photos/movies at home, and that's all the computing I'd really need.
Yeah, it will be intereseting to see what the future brings. On the one hand, consoles are selling better, on the other hand most sucsessful products groups are forced to standarize sooner or later, and consoles are getting more and more like a PC.
Today i use a gaming PC, with the exeption of setup-complexity and initial cost the PC beats the consoles on every front, cost per game, control-options, graphics, modability, noise and so on, and mini-itx is way to small for a fileserver for me. Sadly this may vhange in the future (well, maybe not so sadyl when it comes to the fileserver, cheaper SSD will eventually make them smaller)