No, I don't think the PS3 will just flop immediately, but it will be a failure overall. I see it being a Sega Dreamcast, going along for a bit, mostly on the 'name' factor, but not succeeding overall, and eventually being forced out. Cool graphics alone doesn't sell systems. Otherwise, the 3DO and Atari Jaguar would of been huge successes. They had amazing graphics for their day.
And yes, the CD-i was a crap system for several reasons. But it was a very expensive crap system. The 3DO and Neo Geo were decent systems, but mostly unaffordable to the general public. I just don't see that many people wanting to plop down $600 on a PS3, when they could have a Wii or an XBox 360 for a fraction of the price.