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Serious_frusting said:

Tectures have taken a hit, sharpnes and depth of field by the looks of it. Lighting, motion blur and the general look of the game has improved

One place to save space is to end up using less complex textures.  Due to a cap on downloading size, Capcom complained to Microsoft that their Bionic Commando (2D) title would not look as good as the PS3 version, because they had to limit the texture size.  And considering the beta is being used to test balancing of gameplay, and give the engine a run, it makes sense they wouldn't go with premium textures.  They also cut out a number of modes of play that will be in the full version, because they weren't interested in testing that.

If the full version of Gears 3 ends up looking like the textures take a hit, then Epic did manage to nerf textures to make other things work.