Microsoft and Sony are using the term teraflops the way Sega and Nintendo used bits back in the old days. Much like then, I don't really understand what the benefit of more really is. What are teraflops?
The most concise explanation I've seen was in a Gamespot article:
"[I]n simpler terms, the number of teraflops a system has can give developers a general idea of how much computing power they have to play with. The more teraflops you have, the more floating-point operations you can perform per second. With more teraflops, you can create larger, more complex virtual universes."