Yes, but graphics do add up to making a better game. Processor limitations did come into play this generation, that's a fact. But man I remember booting up The Order 1886 and my jaws dropped. I know that not many people loved or even liked that game, but it blew me out of the water. I think gen 9 will actually be the generation where the lack of loading time, physics, and AI evolution will bring a whole lot to the table.
Oh, and let's not forget that generation 8 was pretty heavy on how multiplayer evolved in games and how we consume them. It's not a very visible leap, but a leap none the less.
I've actually played fairly old games that both lack load time and have impressive AI. The reason these things don't seem to exist right now is because of the focus on graphics. We are past the point where impressive graphics can make a game better. Instead we are at a point where the best graphics only make a game worse. This is because development budgets are the really limiting factor and not machine hardware. The more money that goes into developing graphics, the less there is for other aspects of the game.