Graphics only sell to a point. Eventually, you hit the point where further graphics upgrades just make the game look shinier and more detailed, but not necessarily better. We hit that point last generation. The leap from NES to SNES (huge color and sprite scaling jump), from SNES to PS1 (3D character models became viable, 2D broke free of tile-based limitations), and PS1 to PS2 (3D character models improved dramatically, detailed 3D environments became viable) were all significant and easily traceable even with downsized images.
The difference between PS2 and PS3? Not so noticeable. It's mostly just a bigger and more detailed version of the same thing we saw on PS2. Sample it down to even 640x480 images, and the difference mostly is aesthetic (if it can even be detected). Until they find some way to use the higher resolution to real effect (instead of just improving on what we already have), high-res graphics won't be drawing in the majority of gamers.
Sky Render - Sanity is for the weak.
