If you think there are too many systems now let's look back at 1995.. we had:
Sega Genesis - Near the end of it's life but still getting a number of great games.
32X - On the decline but the cheapest way to get a 32-bit system.
Sega CD - Also declining but was a good system for RPG fans.
Super Nintendo - More than a year away from the N64 so it was still receiving strong support.
Sega Saturn - Launched in May but the library didn't catch-up until late fall.
Sony Playstation - Launched in September and took the lead over Sega rather quickly.
Atari Jaguar - Barely alive but still getting new games.
Atari Jaguar CD - Launched but disappeared quickly.
3DO - See Atari Jaguar.
Game Boy - The dominant hand held system of the era despite still being B&W.
Game Gear - A distant second but still had new games and some diehard fans.
Virtual Boy - No comment.
CD-i - Barely on the gaming radar.
Neo Geo - A niche system.
Clearly that was too many as close to half would be discontinued the
following year.
To compare to the active systems today (which would exclude Gamecube and Xbox since they've both been discontinued although used games are still widely available):
PS2 - Roughly in the same spot as the Sega Genesis in 1995.
PS3 - Somewhere between the original Playstation and Saturn.
Xbox 360 - You could make a comparison to the original Playstation, the system of choice for most gamers.
Wii - Can't really compare it to any prior system.
DS - Like the original Game Boy, technically inferior but by far the best seller.
PSP - Appears to be doomed to the same fate as the Game Gear.
I think the mix today is pretty healthy, there are systems that appeal to three major gaming demographics -- hardcore gamers, casual gamers, budget gamers. The only thing I question is whether there is enough room for both the 360 and PS3. They're both going after the same demographic and I don't know how many are willing to buy both.