Oh...well next gen could introduce the last gen. So....

i'd wager it depends on the state of display technology. if in 10-15 years we are still looking at 2D images on roughly 40-50" screens we've probably reached our graphics cap next gen ... for the most part.

it displays are fully 3D or holographic or 150" or something completely different from what i can currently think up... then there will probably room for improvement still over what next gen hardware can accomplish.

no won't stop until you can't tell it's not real/movie quality CGI of the time

Which studio is going to be able to afford to pay for these $150 million games? 

I think this coming generation, graphics will reach a point of fidelity where if a developer is willing to spend enough, a game can begin to look like a CGI movie, which will be good enough for most people. 

After that I think it'll be a point where most people, even core players really don't care. In the same way I don't sense there's a big push from consumers for TV resolution beyond 1080p. That's already a level of clarity that most people are happy with. 

Their numbers grow daily. Oh, how I long to cast off this filthy peasant's garb and become one with the master race.

No. Movies are still going ahead with better CGI every year and consoles are lagging 2 gens behind movies.
Screen size doesn't have much to do with it, but it will be at least another gen to get a satisfying performance on 1080p, next gen won't cut it yet.

Tools will get better and easier to use, the rising costs will not be as bad as feared.

It's not just the race in graphics that will keep the war going. We're still a long way from realistic physics, volumetric flowing water, weather effecting terrain, complex evolving procedural worlds. There are lots of other things that can be done to improve immersion instead of higher res textures.

The ultimate goal is the holodeck. Before that lightweight glasses that give you a view indistinguishable from real life. Before that 8K stereoscopic glasses with a 150 degree field of view. Still a long way to go.

i likely won't be around by then. i hope the 8th gen. isn't about graphic's, as i'm perfectly content, with UC3, being the 8th gen's benchmark.

We are no where near there, but I could see rate of increase slow as development costs continue to rise. How many people would be perfectly satisfied at a certain level of graphical fidelity if it meant games could be cheaper?

Ultimately the market always decides how fast and far we will go.

CoD brings in $1b each year and GTA IV already cost around $100m, it's not going to happen any time soon but it will probably happen eventually. Think of the game industry like the film industry of the 1940s where film studios which would each release dozzens of low budget movies every year. As the game industry matures eventually we will get to the point where the film industry got to where they release 1-3 blockbusters each year with massive hundred plus million budget. With the more indie and B teir games and F2P games like LoL etc filling the void that TV and the indie and low budget B movies fill in the film industry. 

I mean it's clear to see that the industry is going in that direction already as publishers put out fewer AAA games and now their is talk of moving to "AAAA" productions. While mid teir games are dieing out and being replaced with lots of indie/downloadable games which can be thought of like TV shows etc. 

I doubt it.

You will still get graphic wars even if the next next-gen PS and XBox's have the exact same innards.