If the next gen lasts 4-5 years, I think not supporting HD is shortsighted.
There is a difference between non-HD and HD, and surely some people will be buying HD games/console simply because they look great, but in my case, while I'm interested in games that are fun, I also don't mind them looking as great as possible.
HDTVs aren't the majority yet, but it won't be too long--you're hard pressed to buy a >30 inch non-HDTV, and with Bluray and HDDVD coming out very soon, it is possible they'll be within reach of the average consumer by Christmas-after-next, if not earlier.
I've had a widescreen/bigscreen HDTV for about two years, and I don't watch HDTV just because it's HD, in fact, I watch very little actual HDTV content--but what I do watch, can look incredible. I would like for quality games to take advantage of that as well.
But re: console, it won't be a deciding factor, it'll be a minor factor that goes into the decision. Question 1, as always, is "how are the games". I don't have an Xbox 360 yet, because there are no games that appeal to me yet.