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"Graphics" is a little vague, since it includes models, textures, lighting, and animation, among other things. On top of that the 360/PS3 also have advantages in processing power (more stuff going on at once, better draw distance, etc.), audio, physics, and AI.

It's in no way an insignificant difference but right now it's not worth the extra cost to most consumers when compared to a cheap Wii which has games which still can look/play as good or better than before and offers a novel control experience.