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While I would give Bioshock best atmosphere(the environments are gorgeous) I think best graphics is a stretch. The charater models are just ugly IMO. The models in Mass Effect were lovely but too many of the environments were bland and pop in detracted from its looks. So that gives Gears the nod for best looking game overall IMO.

Its all subjective. Many will prefer a particular art style over technical prowess. Some might choose Banjo or Fable for their art style. I'm pretty happy with the way Fable 2 looks myself but I have a feeling the best looking 360 game crown will pass to Far Cry 2 or Gears 2.