Are Sony's 1st Party Studios Leading The Way?

[M.U.G.E.N]

GOW3 introduced some fun fluid gameplay with an unpapralled sense of scale and direction (in art and story)...it was already a great franchise and GOW3 was no exception but it was a more complete experience than the previous two in every possible way...the game starts with a bang and doesn't stop the momentum till it ends

As for the graphics, hell yes. The only rival I can think is UC2 which is up to debate....games like Gow3 benefits from great graphics and detail...it helps create the perfect atmosphere for the game and Santa Monica did it brilliantly as well, one can say it was the icing on the cake if you will... :)