DK it's common knowledge that you can produce better graphics then any home console on a PC. I have a xbox 360 on a 50in. Sony SXRD (a GREAT HDTV) and I will contest that a PC can produce better graphics on high end systems.
I will take a 360 over most mid range PC's though because the 360 will produce as good if not slightly better graphics at a far cheaper price.
The problem with things like the 360 (aka home consoles) is that after a few months the components inside the system, which when initially build were the leading technology, are now outdated and the PC once again becomes king of the gaming world. PC's will ALWAYS be the industry that leads gaming forward.
A clear example of all of this would be Oblivion. Best example out there.