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some game developer guy just said something like " I think we've got the skills we need to make anything we want, anywhere we want, on any budget we want."

oh yeah it was Hideo Kojima

http://www.1up.com/do/newsStory?cId=3176763

To think that game developers cant create something cinematic or exciting because the limitations of specific hardware is just ridiculous.

Constraints exist to push creative minds to find ways of expressing their message/game in an innovative and impressive way.

An artist can express his message with the lowest grade of tools to the highest. Not being able to do so is the limitation of the artist.