Well they do right now. But remember this
Call of duty 2 on Xbox 360
Call of duty: Ghosts on Xbox 360
I chose these two games because they perform similarly.
With the PS4 and Xbox One already looking slightly better than the current gen games imagine how much better they will look in a year or two. Ghosts will look like Call of Duty 2 looks to us today.
Agree. But while cod 2 is ugly today, back in the day was not. I'm much more interested in developers putting time and effort working the graphics on an average engine, than to spend all their time and money creating a new one just for pretty textures and lightning effects. But since most people are graphics whores, graphics will sell games and consoles.