Having more RAM in total is better than a smaller amount of faster RAM because of diminishing returns due to latency and higher costs. The gains between RAM generations are advantageous but not as important as the total amount of RAM.
But 1GB? 2GB? Try 4GB or more. Either Nintendo is making a console that competes with only the PS3 and 360 on a technical level (in which case they are six years too late), or they are making something super-powered that will be able to compete with other next-generation offerings once those arrive. They won't make the mistake of making an in-between system.
Developers have always cited the severely limited RAM as their number one issue this generation, and exponentially increasing it will allow for incredible possibilities that simply aren't feasible on current consoles. To put things into perspective, on the PC games like Crysis make full use of 2GB+ to pre-cache massive levels into memory along with a large number of assets (depending on how much RAM you have). Swapping data in and out of a RAM cache is dramatically faster than pulling it from the hard drive on demand (or, worse, the game disc). Being able to pre-cache assets into RAM results in noticeably smoother gameplay for any type of game, reducing the pop-in and texture delays many current console games suffer from. The ability to work with the entire level also offers all sorts of gameplay possibilities that just can't be implemented with a crippled amount of RAM.
Sure, Crysis achieved stunning results with a mere 2GB, but that was in 2007; even the most budget of gaming PCs built in 2011/2012 will have at least twice that, and console manufacturers wanting the next generation to last until something like 2020 will want more too. Giving a true next-gen console 1GB or even 2GB would severely cripple its potential and would make it hopelessly weak once Microsoft and Sony launch theirs with 4GB or more.
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