Still, there is some hope on that front. In the PC market where there are multiple processors to support, developers can't fine-tune games for a specific CPU. This heterogeneity of hardware especially hurts with platform-sensitive optimizations like branch hints, which is one reason they don't get used much. In contrast, with the Xenon, the hardware will be fixed, which means that programmers can go all-out in profiling and optimizing branchy game control, AI, and physics code using every trick in the book. Furthermore, console coders can also take heavy advantage of prefetching to overcome the Xenon's cache size limitations. So it's quite possible that as time goes on developers will find ways to get much better branch-intensive code performance out of the hardware. Just don't count on it in the first generation of games, though.
At any rate, Playstation 3 fanboys shouldn't get all flush over the idea that the Xenon will struggle on non-graphics code. However bad off Xenon will be in that department, the PS3's Cell will probably be worse. The Cell has only one PPE to the Xenon's three, which means that developers will have to cram all their game control, AI, and physics code into at most two threads that are sharing a very narrow execution core with no instruction window. (Don't bother suggesting that the PS3 can use its SPEs for branch-intensive code, because the SPEs lack branch prediction entirely.) Furthermore, the PS3's L2 is only 512K, which is half the size of the Xenon's L2. So the PS3 doesn't get much help with branches in the cache department. In short, the PS3 may fare a bit worse than the Xenon on non-graphics code, but on the upside it will probably fare a bit better on graphics code because of the seven SPEs.
In sum, the Xenon will certainly make the Xbox 360 a 3D graphics powerhouse. Though history suggests that the Xbox 360's games will probably never attain the level of graphical realism promised by Microsoft's pre-launch hype and portrayed in the pre-rendered "game demos" that were shown off at E3, gamers can nonetheless expect a significant advance in levels of graphical realism and visual immersiveness.