Losing money on the hardware isn't a reason to not put in a better gpu, last time around bluray + R&D on Cell = mega bucks and even an expensive console lost money.
However a shrink later and its making money, another shrink later and its painfully cheap, to the point where something with twice the power would still make a killing. The money is all in the software though and the guys who really care about the money don't give a crap about losing on the hardware.
If the 360/ps3 gpu's had been twice as big, the psu block would cost $10 more, the gpu would cost $20-30 more, and the added bandwidth, memory/cost would bump it up a bit. They'd make more of a loss but 2 years later, they'd still break even, and for the next 5 years, you'd have something with vastly more power to exploit.
Either way, we'll have to see AMD have said semi custom APU's which suggests, any of a LOT of things, die stacking, sticking a second GPU on the same package as an APU, doubling gpu size for a given APU, giving it essentially crossfire. So a 7670 on die with the APU like a trinity/kaveri, and adding a second 7670 on package, giving it huge bandwidth and far more ability to do fancy intercontrolling of the chips and pushing crossfire more hardware than software.
We've got die stacking, doing really fancy interconnects on package all coming in the next year or two, game changers in terms of on die bandwidth and IGP performance. Do they have them, maybe.
7970, not a literal 7970, if there is a APU + a discrete gpu, there is very little need for the kind of gpgpu power a 7970 has, or a 7670, its all eating power with no benefit. I'd expect, whatever happens, for the cpu/gpu to cut out anything that won't be used and to be significantly power efficient. I'd imagine the APU will be one die and done at 28nm, possible they will do the CPU on 32nm and then stick it on package with a gpu die at 28nm. AMD are certainly moving cpu's to 28nm and aren't too far from it so its definitely possible but maybe not yet(cpu's take way longer to tape out than gpu's).
If I were Sony/MS I'd certainly be going "bigger" on gpu than last time to extend the life, ultimately in 2-3 years the process tech and a respin of everything will bring costs down hugely and the next years of sales will make up for any losses anyway.