The amount of "bits" is not an important factor in gaming consoles. What's really important is processor speed, video card, amount of ram, etc... Another important factor is how well the console maker's development tools use the hardware and how well the developers program for it.
No, they decided to go back to the old times, when they ruled the market, and thus have decided to scale back their systems to 8-bit, and rather concentrate their efforts on making new games work for it.
Its this simple. The Gamecube is powerful as hell, and has the memory to make it double the power of the Playstation 2. XBOX will be probably a significant amount more powerful than Gamecube, also, so stay tuned.
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