First, I want you to create a 3d box. Now Create a 3d Dragon. Did they take the same amount of time to create? Definitely not, the same goes with creating anything in a 3d environment. And when you have more and more polygons to work with, that means it takes more and more time to put in every last bit of detail. And that's not even including animation, AI etc. Better hardware means they can do more, which will also take more time. So ultimately they have to decide to either spend more money to create better visuals, or spend the same amount of money but either make it look like a last gen game, or cut something out. Lately Sony has been giving us a bunch of games that lack content, Knack, Killzone, Infamous. None of those games are worth 60 bucks, the amount of content is comparable to most indie games, but hey, they look pretty.
Something...Something...Games...Something
