Equating higher cost with guaranteed quality is the sign of a fool.

Don't underestimate either of the HD consoles though, they're very comparable to one another.

I've heard this argument since the NES days. People wondered exactly how much better graphics could get with the SNES and Genesis. We all know how that worked out...

Anyway, we'll see some scaling back of bleeding edge hardware, but mainly for the reason that it costs Sony and MS too much to design and manufacture the hardware, forcing losses for the first year or two. Nintendo proved that isn't necessary and MS/Sony will follow suit next generation. Probably not to the extent of the underpowered Wii, but it won't be a HUGE leap in hardware tech.

On the software side, we'll see companies like Epic and id really flourish in the coming years. Their engines will become more and more of a staple to other developers who can't afford to spend two years and $5m on an engine alone. Over time, I expect the middleware providers to become more and more important as we see developers rely on them for texture packages, graphics engines, physics engines, sound packages, etc. Basically, to stem enormous developing costs, we'll see more devs rely on a "plug-and-develop" strategy to games where most of the back-end stuff is provided to them by someone else and they work on story, characters, and upper-end gameplay.

You're completely ignoring the fact that this generation is barely getting rolling. Two years into the sixth generation, we were still seeing games that were marginally better than the PS1 generation and the Xbox/GC still hadn't even released.

There is still three to four years left in this gen and games will continue to look better and better.

PS. If you don't see huge advancements from GoWII (last major release in the previous gen) to Heavenly Sword, Gears, and Mass Effect, you aren't looking very hard. It's not only the graphics; the physics, environments, AI, and number of things onscreen are making huge gains. 

AMD, Intel, and Nvidia just needs to take a year break from releasing anything and work on some power house PC equipment. The year will allow devs time to draw out all the power of the current gen video cards and processors then they have a foot hold on where they will be able to go with the next generation of hardware.

The result is slight legend. It costs a ton of money to add each strand of facial hair to a character model, and each bump to a monster's skin but the end result is impressive for the first ten seconds you look at it, then it's like anything else.

*Deleted because RocketPig basically said everything that needed to be said.*

That's not true at all. For games like Mass Effect, bad textures would kill the story. Watching the game on a 50" screen, I often forget that I'm playing a game. It feels like a friggin' movie. I'm 10 hours into the game and it still amazes me.

Of course, the game also has more than its fair share of technical faults... 

Budgets have risen drastically for negligible results then? Is that your point?

I hope you have a point that goes beyond the obvious that more graphics cost more.

Edit:  Put your post back, I already caught it.

HOLODECKS!

I'm guessing you've never watched Star Trek TNG

edit :spelled Holodecks wrong.. well it still might be wrong

There is no technology wall here yet. Development has to shift, and development tools have to shift.  Consider the development of applications and operating systems.  It has gone from something written from scratch and working on a very simple level to something where you use layer upon layer of complex development toolkits to generate a very abstract application very quickly.  For example, making a simple text based word processor could have been done by a single programmer in the '80s in, say, two weeks time.  In that same two weeks, an adept programmer now using tools, APIs and toolkits properly could develop a simple GUI-based word processor with spell checking and a few advanced features.

Given, these would both be *very* simple word processors (you could type in a box and print would be the idea -- modern word processers are remarbly complex), but the point here is that development has shifted in such a way as to allow much more complicated and abstract programs be generated very quickly.  The GUI stuff alone represents years and years of work for teams of programmers, and a programmer can harness all of that work easily.

Consider middleware for games.  You have the Unreal development platform, for example, and it provides an interface with which you can easily import models, assets, create maps, etc.  Programs for creating those models and importing animations are getting more and more complex.  As computing power increases and programs improve, these tasks can become easier.  The issue we're running into now is that the scope of the games, the scope of the art and the scope of the graphics are increasing faster than the development tools are growing.