I don't think the financial impact is due to engine/coding coding or lack of reuse at all -- I think it's mostly from the higher-spec audiovisual expectations for HD games. It definitely takes more effort to paint a texture in high-resolution, then derive a matching bump map or normal map and/or specularity map from that texture, than it does to just paint an old-fashioned low-resolution texture. It takes more effort to model a realistically asymmetric stone archway with crevices and twists and crumbling rock than it does a simple horseshoe shape with a granite texture slapped onto it. Game production costs are going up because now everything is expected to look and sound really, really good on the high-end systems. Say what you like about Ridge Racer 7, you can bet it took a lot more resources to create its look than it did Ridge Racer (1). Even if the underlying code were exactly the same source ported to the Cell, it would have required a bigger investment to make it look like a 2006 title.
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