There's still plenty of room to grow for both consoles;
Sony for example recently unlocked a further 70mb of usable RAM for developers and Naughty Dog are probably the only developer to program their engine to ensure every SPU of the cell processor is working at all times. There is still more in that system obviously.
For the XBOX 360, there is probably a similar amount of growth available as most developers thus far have been using Unreal Engine and other non-optimized engines. Alan Wake shows that the 360 is capable of more. Perhaps not as much as the PS3 as it has been out for a longer period and has slightly weaker hardware but the difference isn't that great between them anyway.
Plenty of life for both. Even the Wii could look better and its hardware has basically had 10 years of games development.
