I wonder if forgetting the wii for a second. Whether graphics will in any way affect the PS3 V.S 360 battle.
The two consoles are competing directly based on almost soully graphical power. Microsoft has only been in the race for a few years and its first party titles don't have the huge user bases GranTurismo has. However Microsoft and Sony have been brought almost to a level playing field (Japan excluded). Just look for a second at the consoles power Microsoft and Sony have pretty much neck in neck strength!
According to developers in magazines and newspapers such as EACanada have stated in the past that the PS3 is so powerfull making games that can utalize all of its power is nearly impossible with current technology. Other companies like Konami I believe have also stated Blu-Ray disks store so much memory they would have to do tons of extra work just to fill it. From what I've gathered 360 can handle the best games that can be made albiet the memory of the Blu-Ray disk opposed to that of HD-DVD.
Right now Sony is showing off the PS3 by making games designed for 1080p HD resolution, that may look better then many of the X-360 titles but Microsoft could easily match that right now. I don't think we will see PS3 games surpass the 360's capabilities for a few years. As Sony said this console was built for two generations a life span of ten years. So far advanced that developers can't really develope games that utalize its capabilities infactit'll be years before developers have reached the limits of 360!
So how will graphics affect them, at the moment PS3 sales aren't too much better then 360 sales 6-month in! (Are they?)
-JC7
"In God We Trust - In Games We Play " - Joel Reimer