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People seem to forget that graphics don't just mean looking good.

Think about Assassins Creed. That game isn't possible on Wii, not because of HD textures and whatnot, but because of the sheer interactivity of the environment.

You can climb EVERY tiny little brick that sticks out of a vertical surface.
In Crysis, you can shoot any random tree in the jungle, and it will eventually break in two.

Things like this can improve a game greatly.