I think this is good for PC gaming as long as the Steam Box uses a PC operating system (and uses the same version of the games as other PCs) and is either upgradable or they have different spec versions. This will mean that they are basically creating more games for the PC, which is good.
I personally will be sticking with my gaming PC, but most of my gamer friends would love one of these. Most of them have gaming PCs, but they would love to just be able to plug and play like a console (no driver headaches, incompatibilities, etc). And the ones that predominantly use consoles do so mainly because they don't want the hassle of using a gaming PC.
This actually makes a lot of sense for Valve and I really hope they succeed.
Now if the Steam Box uses its own OS with games that aren't compatible with either Linux or Windows then they can go fuck themselves.