Ya but those things are not going to happen this generation. The question wasn't "where should the graphics be" it was "where will they be". It would be nice to up the frame rate past 60 fps but that wont happen much. All i can see Sony and Microsoft doing is upping the CPU and GPU and adding some bells and whistles. Nintendo however will be able to up their console to current standards. Even with a bit of tinkering we will still only have 60fps and 1080p. People who were brought up with PS1 think every generation their can be a massive upgrade in gaming. PS1 (CD) - PS2 (DVD) - PS3 (HD)

But we have hit one of those rare times where it will not happen.

3d in 1080p via HDMI 1.4?

ps3 says its HD but games like call of duty and grand theft auto dont even do 720p and AA in most games is minimal.

im expecting the majority of games to be native 1080p 3d with biggest visual improvements in AA and draw distances.

just try and imagine next gen assassins creed or grand theft auto.....WOW.

How was the 360 graphics compared to PC back when 360 launched? How was PS3's?

Shouldn't that give us a bit of a steer as to how far forward the 720/PS4 graphics will take consoles?

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Personally, I would expect the raw processing power jump to be less than the jump from the PS2 to the PS3; and for diminishing returns to make the perceived jump even smaller. If Sony and Microsoft push for many "technical" enhancements (1080p, 60fps, 3D, etc.) the perceived benefit could be pretty minimal.

Where I expect a big difference is in interactivity ...

From the dawn of 3D videogames developers have been limiting interactivity in the environment to ensure that the resources are directed towards producing the best visual results; static lighting and objects used to limit real-time calculations, non-deformable objects to limit the quantity of polygons, etc. are all tactics used that limit interactivity but improve graphics. The "classic" example I would use of this in this generation was the original FEAR, which was a game that was more static than the original DOOM and Wolfenstein games released a decade earlier.

Why I see growth in interactivity is that the benefit of limiting interactivity will be heavily reduced by diminishing returns which will change how the trade-off is seen.

You bolded the opening part of a paragraph that was specifically talking about the future and the road to photo-realism, not the past or any advances we've already seen. Way to quote out of context to contest something that I didn't even say.

I disagree. I think the raw processing power will have an even bigger jump. Graphics technology, however, will seemingly not be able to advance at the same degree. The thing is, the amount of detail we are able to put in games needs to exponentially increase if we are to even see a difference between generations. For instance, you will see a huge difference between a picture made with 100 pixels, compared to one made with 1000.  However, the difference between a picture made with 1000 pixels compared to one with 2000 may not be that much even though the difference is even more than the previous comparison. This is sort of why pc gaming hasn't really changed all too much over the past years. The best looking pc game, arguably Crysis, is already 4 years old, but the hardware  since then has gotten way better. 

This is what i'm hoping for.

I hope next-gen games look like Epic said they would.

They've shown a tech demo running in real time using 3x GTX580, and they said they can get it running in a single GTX580 if they optimized it.

This tech demo has way better graphics than anything on consoles and even PC, it truly is the jump than one would expect from one generation to the next. It almost looks as good as Final Fantasy Versus XIII CGI graphics.

Watch in HD... it's still compressed but it looks better than 360p :P

http://www.youtube.com/watch?v=RSXyztq_0uM

There's also a Cryengine 3 tech demo:

http://www.youtube.com/watch?v=VJEL9Kipuw4&feature=related

I think costs shouldn't go up too much, look at The Witcher 2, it has better graphics than anything on consoles and it only cost 8 millions to make.... now look at Uncharted 2, it cost 16 millions and it has worse graphics than The Witcher and it also is way shorter and not open world like The Witcher 2.

As long as next-gen console's games look like the Samaritan tech demo or better I'm going to be happy with the graphics... until I get tired of them and want something better again.

I'd actually appreciate just a small jump in graphics.

Where I'd appreciate a large jump is limeted load times, frame rate and interaction with the environment.

I want things I've destroyed to stay destroyed, I want dead bodies to not have to dissipear, I want the world to have the power to remember what you did to it.