Since Microsoft Game Studios doesn't have as many development studios as Sony Computer Entertainment, the 360 has had less of an opportunity to shine in this area. Also, as a thread some time back mentioned (selnor, was that you?), an over-reliance on Unreal Engine III has limited even the desire to create graphics engines designed to take advantage of the exact specs for the 360. The unreliable nature of UE3 on the PS3 forced talented devs to develop their own engines.
With the 360 deep into its lifespan, though, hopefully we'll see more devs take the approach that Bungie, Remedy and Rare have taken (face it, Lionhead engines aren't impressive) and continue to push the particular limits of the 360's architecture for remaining 3-4 years of its lifespan. Hopefully ...
