From one layman to another...
I think it is more accurately referred to as: 128-bit...floating point...color ...processing. The actual images you've seen are still just 32-bit color.
There is more than one reason they can look better:
Game utilizes extra capabilities: for a game that can handle layering many effects in as few passes as possible and has enough effects layers to worsen the image quality of these effects on older cards, the newer cards would look better. The problem with this is that I don't know that any old games operate like this, so only newer games would see this benefit.
For multipass: the "floating point" part means that if the cards operated like old cards (render one pass to a puffer, then layer on more effects in another pass, and maybe another pass after that) and they used floating point buffers (which the game would have to specify to use), then they would look better. In this case, either the game is old and isn't fully utilizing the cards capabilities when multipassing (an old game quickly hacked to support new capabilities would possibly do this), or the game really needs to do this even with newer capabilities, and I don't think that will be common, if it happens at all, due to slow performance.
New ways of doing things: the ability for higher precision, and using floating point, allows things like High Dynamic Range to be rendered more easily, as well as I don't know how many Other Cool Things That Might Become Common. All of these will also require new(er) game coding approaches, and hacking them into old games seems like a low return investment for most cases (maybe valve, for example, would have motivation do something like that, but I don't think their half-life engine is capable enough to benefit).
The good thing about the "game has to be coded to support this" situations above is that a game coded to support shaders at a DX 8 level should be able to be enhanced for the advantages offered by DX 9 level shaders easily in many cases, and many upcoming (as in near future) games seem to be doing exactly that.
Something final to note: for color processing the 9700 family has 96-bit color, not 128-bit. For real time rendering (i.e., games), the difference between this and 128-bit color would end up being invisible in final output (32-bit color). Hmm...in fact, I'm not sure how much processing would be required for there to be any difference whatsoever between the two in the 32-bit color, or whether that amount of processing is reasonable for games.
---and for my friends across the Atlantic:
American English Error Accumulator: uuuuuuuuuuuuuu