Definitely. They'll need to do something mind blowing or revolutionary if they want to compete with the top dogs. They can't use old Resistance 1 & 2 graphics anymore, either they pump it up, or do something amazing with the gameplay [4 player splitscreen online anyone?]
All the big games are noticed for three things: Graphics [Killzone 2, God of War], Originality [Portal, Left 4 Dead], or Storyline [Bioshock, Heavy Rain]. Things like Uncharted 2 combine all three things, which is why it got so many great reviews.
Insomniac has to realize this and do something about Resistance, or else it will be classified as all the other FPS in the aisle, and won't get any notice at all.
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