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Games have stagnated in general...
There's Always Exceptions...
Many Western RPG's, and Japanese RPG's have gotten dumbdowned.

Or stagnated... sure the cutscenes, acting have gotten better, in general have gotten better.
But really, though I love games with story's in them, I can't say that technically speaking any videogame stories come close to my favorite story compared to a movie or book, with sophistication and lack of plot holes.

I do think shooters have gotten more interesting, but that's because they put in some RPG-ish or puzzle elements.
Like Mass Effect, Bioshock, Gears, Uncharted.