Still love the look of Mario 64 but part of selling new games is showing more impressive graphics. As someone already pointed out realistic graphics date the hardware more than cartoon graphics. Just small improvements in realistic graphics seem to require a large bump in performance. Creating a more sophisticated physics engine so objects can be interacted with more realistically has large cpu requirements.
You wonder where the limit ends. Normal eyesight tends to focus in certain area's you look at, depending on distance. There may be graphics in the future optimised to give maximum resolution for human eyesight that improve on reality and is actually sharper and brighter overall with greater contrast than reality.
Not forgetting all the improvements in AI etc so that a Nintendo game actually has characters close to being self aware with more varied interaction with the player.
I'd say we are really only at the beginning of games and what they can achieve.
