http://www.heise.de/newsticker/meldung/94614

 "What defines a so called Next Gen Console? More computing power? The Graphics? For the Industry veteran Don. L. Daglow the focus is on new gaming experience. The head of Stromfront Studios analyzes on the Games Developer Conference in Leipzig the pig cycle of consoles, which repeats all five years." ...

Then he basically says, first there are coming traditional games, because early adopters are hard core gamers. In this phase developers are whining about low profits.

Next step is a improvement, because developer know their way around the hardware. The profits of the company are growing. With more profits, the company's can risk new concept of games.

 In the third phase the casuals  replace the hardcore gamers as biggest group of customers. Therefore film licenses are getting more important.

...

"For Daglow it is not more computing power or better graphics is the definition of next gen. It is the new experience of gaming, gamer couldn't do before and the new potentials that are open up for the industry.

As examples Daglow mentions games like Sim City or Guitar Hero. The second has broken a fundamental branch rule. It shows that you can move expensive hardware with a game and the Box does not need to be in the standard size. Guitar Hero enabled gamers the first time to have hours of fun with friends and relatives, regardless if they are Hardcore or casuals. On the other hand Geometry Wars on the Xbox 360 showed, that retro games can be very successful  on Next Gen consoles.

Likewise, the Wii changes the perception of the potential of Videogames of many people dramatically. One could imagine new game concepts, not possible in the generation before. This is finally more valuable for the development of the gaming culture that just increase the computing power."

 For me it looks like third party are more and more behind the Wii.

Paradigm shifts are tricky. Those clever enough to figure them out usually have a tough time convincing those with the purse strings.