GoW does indeed have better lighting, textures, shaders, largely due to being made by a much more technologically focussed team, but having played GoW3 and seen 60fps gameplay vids of Bayo 2, Bayo 2 is noticeably smoother in motion, as GoW3 mostly bounces between 30-45fps, sometimes even dropping below 30. https://www.youtube.com/watch?v=kYnydQ4t0aU

Setpieces in GoW3 also seem less hectic; in the Bayo 2 demo you were fighting on the back of a jet flying through a vast, detailed cityscape, summonging hair demons with every blow and sending massive amounts of alpha flying around the screen while everything moved at a fast, chaotic pace. GoW3 is more slow moving and deliberate, so there isn't as much happening all at once.

As evidenced by the main character model in Bayo 2 having 50% more polygons than Kratos, it's likely a higher polygon game than GoW3 overall.

Which game one prefers visually is likely to depend on aesthetic taste and how much importance one places on framerate.