A good chunk of the system's cost goes towards making the games on it playable in High Definition. So you're not getting the full value of your next-gen system without HD. That's one of the things I mentioned above about non-/new-gamers not being able to justify the cost of a 360/PS3. $400+ is a lot of money for something you're not going to be using the full features of.

Kind of like PC games, you have 'Minimum System Requirements', and 'Recommended Requirements'. You don't need an HDTV to play the game, but an HDTV would be in the 'Recommended' list.