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It'll probably move ahead to the degree that the Original Xbox moved ahead of the PS2. It will be noticable, but not blow the 360 away.

I do have all of the consoles this generation, and I've only played the Killzone 2 demo (this morning, as a matter of fact). It doesn't destroy the 360, despite what you may have heard. And in all honesty, graphics are really just a small piece of the puzzle. I've spent the last couple of days playing Onchanbara on my Wii (yes, it sucks.) and Metal Gear Solid 3 on my PS3. Graphical capability is always a plus, but it's not the bottom line.