On topic reply:
What is next? in this gen (x2, ps3) I think we will see instances were indivial screen-shots, in-game sequences and parts were if you just saw that, some would think it was real-life footage, if they didnt study it or knew before hand what they were looking at... in next gen (ps4, x3) we will reach those instances more often.
But I dont believe change comes incrementally, in small doses.
How consoles has evolved.
All changes has been small and incremental IMO. Even with NES SMB3 wasnt possible from the first day, but only when the propper mappers, (?) chips (?), cartridges were developed.
8-bit systems, 16-bit systems, CD-Roms, DVD, 32-bit, 3d, Internet
8-bit:
portability (Gameboy), multi player on different machines (GB again), save games (NES, Zelda 1), light gun tech (NES AFAIK)
16-bit:
consoles catch up to arcades (SNES SF2, Neo Geo), much larger games that could hold samples (speech) that sounded good
CD-Rom:
games that could hold videos, perfect speech, non-midi like music, CD-Quality music, space for textures
DVD:
big worlds (GTA), with better textures
32-bit:
games that had real life photos that didnt look dithered or artificial (for titel screens), mo-cap
3d:
better filtering, larger textures, FSAA, good looking water, good looking forests, grass, hair, facial emotions (HL2), good physics (HL2)
Internet:
online gaming, communities, downloadable content