There is simply more money to be made in the console market right now, for many reasons.
One is that few people enjoy the hobby of building and maintaining a decent gaming rig, if you buy a console, you are set. If you buy a PC, you need to take care of it and it can get expensive when you want to upgrade anything.
Then there is piracy, games on console are harder to pirate because all the hardware is proprietary and WILL NOT UNDER ANY CIRCUMSTANCES play a burnt copy of a game; unless it is physically modded or the OS is wiped or some other drastic procedure that may render the consol completely worthless and removes some of the functionality.
Consoles are a larger market than PCs are, it is true that there are billions of computers out there, but many of them are not used for any type of serious gaming.
That being said, PC gaming is not dead, it is just innaccesible to a lot of people. It will be interesting to see what happens when even an integrated graphics chip will be able to put up a decent effort on par with a low end graphics card.
Look at the PS3, it was ~$600 when it first came out, but could play games at frame rates much faster than a $600 PC could.
There are good games on consoles, gears (while not the best fps ever) is a good game and at the time it was released the cover system was fairly innovative.
Consoles manage to play games that you need a high end PC to run effectively (a result of the games being coded to work with the consoles hardware configuration) and can do it without all the attitude PCs give out:
"Make sure you have the latest drivers for you video card, motherboard, sound card, processor, monitor, keyboard, mouse, optical drive, hard drive, monitor, and floppy drive prior to playing the game"