They tried. It was called Larrabee, and it failed. I think it was because they were trying to jump in the deep end, creating a huge chip from scratch. I think Intel are definitely trying again, but with a "from the bottom up" approach, starting with small iGPUs and gradually making them bigger and better, with more and more cores.
I agree. "Good enough" being at least equal to all but the most powerful of cards, i.e. everything below "enthusiast" level. And I think Intel will get there in a few years.
Intel already sells the most GPUs of any company, as AMD and NVIDIA (mostly NVIDIA) have to rely on gaming and graphics design markets. Clearly Intel need only to continue to push their iGPU performance up, and they will swallow more and more of the marketshare. Then, NVIDIA will only be a small company catering to the most extreme gamers and other graphics application users. It's pretty much inevitable.
Perhaps I'm just biased because of my overwhelming dislike of the intel integrated gpu's. my first intel p3 had 4mb of video memory. Couldn't run a resolution higher than 1024x768.
But you guys make good points. I have high hopes for the gaming market though. Maybe if the graphics race slows down, game development will shift to other areas, making games more interesting.