God of War 3 has new physics, didn't you see the organs spill out when he killed that centaur? The gameplay has also changed to be more about controlling a crowd of enemies instead of killing them off a few at a time.
And even without that, innovation doesn't necessitate quality. So if GoW3 doesn't change much but is still looking better than Forza 3 it makes sense for it to be there. They had a category for most innovative I believe, this is for best.
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