We'll probably have to wait for some time further into the generation to really make a good call. As developers get a better feel for the hardware and its capabilities, the quality of games rises in every generation... For now I say it is definitely a smaller leap.
It's already clear effects like lighting and physics are moving well forward though. It will be much more about finer details this generation, which will be ever more noticeable as games run in 1080p. The texture of the fabric on the enemies in that Killzone video, the lighting and reflections off of glass, the particle effects and object physics for explosions, the way fire behaves and affects lighting and shadows, minor facial features and animation details in movement. These are the things that will drive and define the next generation.
