Ok this is the Bioshock preview on IGN and the observation about Blu-Ray occurs in the 2nd page.
Although it was still an early build of the game, the title looks fantastic. The water effects look much slicker, as do many of the environments as they are slowly submerged in water. It's quite obvious that 2K is taking full advantage of the PS3's Blu-ray discs to pack in cleaner high resolution textures for every facet of the game; while we didn't see any pro-pixel leatherization diffusion within our early sections of the title, we wouldn't be surprised if it makes an appearance in the later stages, such as Arcadia or Fort Frolic.
http://ps3.ign.com/articles/897/897091p1.html
What they observe makes a lot of sense as the animation and AI routines can be handled by a powerful CPU and GPU. However what the blu-ray disk give is the bigger storage for more detailed textures that can then be applied over your raw models thus improving the overall graphics a lot.
Makes me wonder at what stage do more and more developers start using this advantage to make games with significantly improved graphics?
Apart from this the preview had lots more interesting details about the upcoming PS3 Bioshock, read on folks.

It is better to die on one's feet
then live on one's knees







