From the GDC keynote, he mentioned that he's always been limited by hardware, funnier still here, in a liveblog from joystiq:

11:40AM The time now was 2005 -- there was a rumor in the industry that a monster machine was coming out soon. And I heard you could do anything. Anything you want! You didn't even have to use a game design! Maybe then I could build the ultimate stealth game."

Mission: "Use the rumored 'amazing power' of the monster gaming platform to create the ultimate stealth game."

11:41AM A year later, this rumored machine came to the market -- it was PlayStation 3.

11:43AM Oh snap! The floor was raised beneath Snake ALL THE WAY UP to the level he envisioned thanks to the power of the PS3 ... but then it drops back down, and Snake falls! The audience erupts! Of course, the rumors could never meet up to Kojima's admittedly inflated expectations. So he set a new mission: "Use the actual power of the PS3 to create the ultimate stealth game."

... But wait, they changed the mission yet again: "Use the actual power of the PS3 to create a new infiltration experience."

So.. he's obviously not happy with how MGS4 turned out, despite how wonderful it ALREADY is. What would it take to satisfy him?

I think even limitless power will still make him dissatisfied. That's a game developer to be proud of!

(in this case, its like he wants to be a god, isn't it?)

Well any game can be improved.

1. It would be nice for the lighting to have more of an effect on gameplay, similiar to Splinter Cell, just more advanced.

2. The enemy AI in MGS is still kinda pitiful. Guards still walk in patterns you can illustrate on paper. They cluster the same way when they find you. It doesn't feel natural. Overall there hasn't been a large AI improvement since the first game.

3. Enemies disappear after a while as you shoot more and more in an area. More hardware power could have meant the bodies stacking up and not vanishing.

These are just ideas I've conjured up in mere minutes, so I can only imagine the lofty things Kojima has thought up over the 20 plus years he's been making these games. He was probably promised the moon by Sony and felt like the hardware did not deliver like they said it would. Remember being told the PS2 would be able to produce Toy Story-like graphics? I'm still waiting for the PS3 to do it.

It's just that I like his attitude. He's not simply satisfied with what can be done with the system. He wants everything to be absolutely perfect, and wants the impossible always.

It's this kind of developer that brings the best out of gaming :D

Well I admire his attitude, and I can see where it would definitely fit into being a great developer, but I don't agree he's amongst the best any longer.

I'll take it you didn't like MGS4

I didn't hate it, but I felt it was trying to play catch up gameplay wise(borrowing heavily from RE4 and Gears) and had a horrible balance of gameplay to cutscene ratio. I can live with having so many hours of cut scenes, even though there were quite a few unecessary scenes and sub plots, but at least throw more game in there. Believe it or not, some MGS fans did enjoy the series because of strong gameplay and not merely to watch a story. Chapter 1 had good balance. Chapter 3 had awful balance. I barely remember playing any of Chapter 3 at all, but I do remember an awful lot of sitting down and staring at the screen. The worst part is that the cutscenes in Chapter 3 were far more action packed than the gameplay was in that chapter, and I wonder why some of that couldn't have been reworked to become playable.

i gotta agree with onyx.

maybe kojima wanted to make them playable sequences, but the hardware limitations wouldn't let him do it, so he just made them into cutscenes?

(thus the disappointment in the ps3 he's expressing)

Understandable it's a valid opinion. Not gonna claim your wrong or anything, I just personally believe it solidified himself as a top game developer not drag him down. I enjoyed it and a massive amount of other people did as well, but not everyone's gonna agree on a game. Can't please everyone.

Edit: I also agree many of the cutscenes should have been playable.

Well if it makes you feel any better, I think it solidified him as the best cutscene director in the business. Then again, that only supports the theory that he'd be better off in film or television. I just don't feel like the gameplay itself was that forward thinking. Much of the newer aspects were ripped from other titles like RE4 and Gears and I still see a lot of good stealth techniques in Splinter Cell that still haven't been matched by MGS4, and SC hasn't even had a proper seventh generation iteration yet. I just don't think there was anything in that game that greatly enhanced what I thought Metal Gear was supposed to be about...stealth gameplay. MGS added a lot to the NES formula. MGS2 added a lot to the MGS formula. MGS3 added a lot to the MGS2 formula, but I felt all Kojima worked on for MGS4 were the shooting mechanics and shoulder view. Where were the stealth innovations? Octocamo? That's auto-stealth for babies. All you had to do was stand next to a wall and wait one second.

I supposed I have one more minor gripe that ties back into the cutscenes somewhat. I miss my Codec conversations. MGS4 really dropped the ball in that area. Codec convos are what originally gave Snake his personality and had you get to know him as a character. Without them, he was a grumbling, bumbling puppet idiot in MGS4 that had none of the humor or charm he's shown in MGS or MGS2 and none that Big Boss showed in MGS3. I missed my Paramedic 1960's cinema philosophies. I miss the flirting with Mei Ling. I miss Raiden's relationship talks with Rose. I miss the option to build the characters as you see fit by clicking on the select button. None of the characters in MGS4 stood as great characters in that game. Everything you love or hate about them had to come from something you took from a previous entry which makes MGS4 as a standalone game just not live up to the lofty expectations I had coming out of the previous three titles full of character development.

It was microsoft who claimed that the xbox would be able to do that.

http://news.cnet.com/2100-1040-250632.html

"One of the basic premises of the Xbox is to put the power in the hands of the artist," Blackley said, which is why Xbox developers "are achieving a level of visual detail you really get in 'Toy Story.'"