> Do we need all the power a PC provides natively to make great games?

I think the market has declared this to be a definitive "yes". Users don't want to waste their hardware dollars so that you can spend them on inefficient solutions.

When your competition takes advantage of the hardware, and you don't, then your application (or game) falls behind in the marketplace.

There's the argument that users are willing to have lesser performance ... for lesser cost. This is true, but quite different from your code performing more poorly than your competition's on the same hardware.

the function of computing power -> game quality is logarithmic, not linear. The 15 years behind of 15 years from now is a considerably smaller gap than the 15 years behind of now.