Realtime graphics are finally blurring into stylized film. I expect in another ten years or so we will, for all intents and purposes, have the horsepower to render photorealistic scenes. The bigger problem may be finding ways to create this content without insane amounts of work. Cloth mechanics, particle/hair systems, realtime physics, constrained IK/semirigid body solvers, fractal elaboration, fluid dynamics, procedural character/animation generation... all of these problems are going to be really interesting as we start hitting the limits of what humans can imagine and express to a computer.
It seems like the more horsepower that these consoles/video cards have, the more opportunity exists to create tools that create part of the graphical experience. IE a toolset that handles creating realtime dynamic forests or cities or hair etc
