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PCs have much higher theoretical graphics power. The PS3's GPU is a 7900GS, and current GPUs such as the HD 5870 have maybe eight times the processing power of that, in fillrate, TFLOPS, shader count and everything else.

The limitation is that games can't get much better visually without spending enough money and time to make the whole game unprofitable. Until we get raytracing to cut graphics engine costs and find a cheaper to model things.