Many games on 360 uses its FP10 framebuffer format, which stores R, G and B as 3e7 floats. This greatly reduces color banding, and is the reason that for example Crackdown can do exposure effects for free and shows nearly zero banding even when blending stuff in really dark areas. Of course, this is converted to 8-bit for scanout, so a higher color display would do no better.
The PS3 does unfortunately not support this very convenient format.