Sure, there is room for improvement in the next generation (probably comparable with higher end PC gaming rigs of current, but for less due to hardware component standardization), but as it's already been mentioned, the real issue is development time/ease of development.
The platform that is most conducive to producing the best results with the least amount of effort, is likely to be the one favored by developers, assuming the platform has the user base to validate the investment of time and development funds.
For most HDTVs, 1280x720 is the standard, and for all intents and purposes fine at normal TV viewing distances. How will that change over the next 4 or so years remains to be seen (how often to people upgrade TVs is the question to ask).
Personally I would have liked to have seen 1920x1080 as the standard this generation, but I suppose there is always the PC if resolution is deal maker for some, even if it doesn't offer all the convenience and ease of use of a console.
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