The biggest problem with Apple entering the Console race is games and the method of control over said games. Developing a home console requires a brand new external controller and the support of developers to make games for a third, probably more restrictive, media format.
I believe it's much more likely that Apple releases a new version of the iTV; except it's no longer a box it's a full blown, touch screen Television set with access to the App store and it's hundreds of already available, downloadable games. From there they can sync it up with the iPhone, iPad, or iPod Touch via Wifi and they've got a controller that everyone's already familier with.
Plus a good portion of games like Fruit Ninja will be fully playable on the TV itself; not to mention the potential to sell, rent, and stream music, movies, and shows right to your TV putting a strain on Netflix and Blockbuster.
Plus, I already have the future of console gaming locked away in my head; I just need time, resources, and knowledge on how to build and program it.
Edit: Or apple could go the 3D route and introduce a Kinect like controller for interacting with a 3DTV with hand gestures. Thing would get pretty pricey though (not that that has deterred Apple buyers before).