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When will people understand that graphics have reached the "good enough" barrier last generation?

Good enough does not mean that graphics can't go anu further, because they can (just look at the most recent PC games). It means that graphics are no longer the determinating factor to make a game or console the best of them all. That value is not as relevant as it was back then. 

Nintendo realized this better than Sony and Microsoft and went with a new direction with DS and Wii. Those systems are the evolution of entirely new values (gameplay, family, and most of all fun) that are far more relevant than graphics this generation.