Quote: "Thing to keep in mind, is that the XB1 may well catch up to the PS4 performance when the new smaller version is released, as its a smaller CPU, should be faster and more efficient. It might just shorten the gap enough for it to be pretty much neck and neck between the 2 consoles."
I think they are aiming for price reduction and power efficiency, rather than performance improvement. It's dangerous to tweak the performance of a console mid-cycle. It would tick off early adopters – although to be fair, they'd probably get away with it after the initial uproar and it may be better for future sales. Still, it would break the typical console rule of all hardware being equal.
I have yet to be impressed by the visual fidelity of a 1080p game vs a 720p-900p game on a television. On a monitor it is another story entirely, because non-native resolutions are very obvious to me, but at the distance I sit from my entertainment setup it doesn't seem to matter. I've switched the resolution settings on my Xbox between 720 and 1080 (for the dashboard) and the same for my Apple TV trying to discern a difference, and really couldn't tell. Maybe up close I would, but I'd go for better (or at least more consistent) framerate personally.