As a X360 owner, I think it's hard to argue that the X360 will always have the 'better looking' games, or 'equivalent looking' games. When you look at the specs, the fact is, the Playstation 3 is better on paper - Blu-Ray, 8 SPEs. Things like that make it impossible to say that "in 4 years, games will still look the same on both systems".
Ultimately, the Playstation 3 will have the better graphics. But I agree with your statement: At what costs?
The problem with the PS3 is that it IS a nightmare to develop for. Games are constantly being delayed due to developmental woes, projects are becoming costly, and in general, it's just a bad system to develop for (not to mention the actual return on your investment vs. the Wii and X360).
Because of that, we're going to see a split in the future of what gets greenlit for the Playstation 3. There may be better 'blockbuster' MGS4-esque uber-exclusives, but they will suffer in cost, development, and rarity.
Food for thought: Gears of War 1 + 2 were made for less money than Metal Gear Solid 4 or Killzone 2. Which games, do you think, earned a better return, and will have a higher probability of seeing sequels? (Of course, KZ2 hasn't come out, but the deck is stacked against it in some ways).
Back from the dead, I'm afraid.
