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Y'all should watch this video:



Near the very end (starting around 5:10 or so) they talk about how they're continually optimizing their engine and stuff, and that they keep gaining more and more headroom on the system. They claim that normally you have to cut features closer to release, but they keep adding more in!

And on the latest IGN "PlayStation Beyond" podcast, they claim that the latest code they saw yesterday looks MUCH better than the preview code we've been seeing over the past week. They claim the difference is "night and day." Killzone 2 talk starts around the 12:00 minute mark.

http://uk.ps3.ign.com/articles/935/935659p1.html