I honestly don't think that there is any logical reason that PS4 has to be more powerful than X720. PS1 was weaker than N64, PS2 was weaker than Xbox and both Playstations obliterated competition. Enter PS3 (which was more powerful than X360) and Sony loses a huge market share. Logically you could say that Sony was performing much better with a weaker console than with a stronger one.
Sony spoiled us with PS3, specially when it came to exclusives, however, PS3 was an expensive experiment in technology that Sony is not likely to repeat in next generation.
However, I have to say that I'm not pleased to hear that X720 is significantly more powerful than PS4 (I believe someone mentioned 30% difference, correct me if I'm wrong). This could very well translate into PS4 not being able to hold 1080p resolution for a longer period and could lead into another sub(Full)HD era, this time perhaps exclusively on PS4. Also, reports of developers once again leading on Durango could lead into another era of substandard ports (aka Call of Duty).
If (and it's a big IF) this turns out to be true, I will seriously question my decision of buying PS4. The only problem I have with owning Microsoft's console is the fact that my country is not officially supported on Xbox Live so that would lead to once again using various VPN solutions for a simple demo or DLC content purchase (this was the reason why I switched from X360 to PS3) combined with a fake UK account.
Sony on the other hand made an effort to bring PSN Store to my country, which is quite incredible considering that I live in Croatia where there is about 100 000+ PS3s (a very small number when compared to other countries). Microsoft on the other hand doesn't give a shit about my country citing "piracy reasons" for Live not being officially available. However, Live is available, for example, in Poland which boasts even higher piracy rate so more truthful response from Microsoft would be "you are too small for us to give a fuck".
Sorry for this small offtopic, back to subject. I would really like to hear some better news regarding improvement in PS4 hardware. I'm not sure pure APU design will cut it (even if 4xAPU via crossbar switch is used like Jeff suggested). If however Jeff's prediction does come true, and if GPU part of the APU matches for example A10 (5800) the whole system could stand at 4x384 shaders (1536 total) which would make graphical part (or at least unified shaders part) on par with Radeon 8850 which boasts almost 3.0 TFLOPS (realistically I will be happy if they match 2.5 TFLOPS). Let's hope that Sony beefs up final hardware to be on par with Durango or at least make difference in power no bigger than 5-10% (presuming of course that Durango being more powerful rumor is true).