At first glance Steam's up and coming console appears to be an amazing thing, and while it surely will be there are a number of things to consider. Currently the FPS genre is beginning a slow downturn, and both Sony and Microsoft seem to be at a loss as to how to proceed in the next generation of consoles. I would love to see both of these companies be shown the door; however, we need to consider the fact that the Steambox could actually gobble up the majority of the market share from both Sony and Microsoft's next consoles...and it will do this by merging the PC and console markets completely.
The Good: Well for one thing there is going to be a whole lot of competition between these three juggernauts, and this is always a good thing for customers. The Steambox will more or less force Microsoft and Sony to lower the prices of their games, because as we all know the price of PC games makes those of console games appear completely insane (especially when you factor in things like holiday sales). Those looking to experience great gaming on a small budget are guaranteed to benefit from this system.
It is worth noting that currently the majority of money spent in gaming is spent on consoles, if a large portion this money can be diverted into the Steambox (and the Steam Marketplace) we are going to see a lot of smaller projects being given the credit they deserve. When I was a console gamer I checked PSN every week to see what games came out, and if 2 or 3 came out in a month that were even worth a glance I felt blessed. On Steam I am literally overwhelmed at what I see, and if something strikes my fancy and costs $15.00, well it goes without saying that I will buy it.
Since it is a console Steam will (hopefully) take the effort to lock it down against piracy, if they do this then there is a LOT more incentive for developers to begin focusing on PC hardware again. Because even if people do still pirate on PCs, we now have a *true* console based on PC hardware that will greatly cut down on piracy. This means that we should hopefully see a lot less ports in the future, and instead we will see more AAA titles geared towards the PC first and consoles second (if at all).
The Bad: One of the best things that I noticed immediately when I switched over to PC was the lack of pointless trash talking. Sure one of us will chide the other, but unless someone is an all out ding fry we're not going to call them out, and if we do then typically they'll either apologize or leave the game. While there are plenty of adult console gamers out there, the majority of children own consoles not PCs, and this can make for a very (unpleasantly) small world in certain online games. Then again, I suppose this is why many of us rent servers or look for like minded groups in order to escape this sort of behavior.
We're going to see a lot of strange behavior in games not only in terms of trash talking, but also in terms of many not knowing what they are doing. Being on a controller is a lot different than a keyboard, and you had better believe that most people are not going to bother switching.
The Ugly: I love Steam, it's one of the very few moderately large corporations that I can say with all honesty that I approve of. They're giving us great deals and are providing a solid, evolving platform where I can game, but as we know a company can become too big (Apple, Microsoft, Sony), and when they do there are certain changes that are likely to occur.
Valve (the company that owns Steam) might decide that they want to go public, and if they are bought and sold on the open market they will have to answer to share holders. I will not bother going into the details of why this is likely to happen (finance bores most people), but I will sum it up with two words: Greed and Profit. Currently Steam needs to be a competitive service because A.) PC gamers demand it at this point, and B.) it's way too easy to pirate software on a PC; but, if they develop a large enough market share their prices no longer need to compete. This could mean that they focus on their console owners exclusively (more or less) and hike prices up on them (and PC owners); but, of course another service would rise up in their place to nab up the true PC community. How long it would take such a company to come into being is anyone's guess though.