FOSS zealots and security freaks might not approvre of cloud(i don't approve either) but lots of companies and the average joe do.
Cloud is just one alternative anyway.

iPhone, Android and even my N900 have proven that gaming works on pocketable devices.
Imagine what will the new Quad Core tablets armed with HDMI and a plethora of other toy do.
BTW, last i've checked, gaming thrived on the console.