Well, believe whatever you want dude. 360 has what, 120+ games now? The 2007 lineup looks every bit as good as the competitor, so I think it's safe to say that on these consoles, with only 512mb of RAM, it's becoming obvious disc space is not a signifigant barrier. We're not talking 'several' games here, we're talking hundreds.
Come now, how is any of this even remotely relevant? There are thousands of games on the PS2, with only 32mb of RAM. You could compare this with the PS2 vs the Xbox, with the latter having a built in HDD. The latter could be used for caching and improve the games considerably, but that was hardly done. Then again, that one game was Halo 2, without which Xbox would have had, well, probably a visibly smaller install-base than GameCube.
The PS3 is what will have to show whether or not BluRay actually makes games look better and/or allow them to be larger, or are enhanced over games on the 360 in any way. The PS3 is only just out, and however well the 360 might be doing, you'll have to allow for at the very least one year for the PS3 to come up with BluRay validating games. It only takes a few important games to show why it matters, and there are a fair number of candidates. God of War 2 already maxed out its first disc for just the game, for instance, and Heavenly Sword being a similar game will probably be pretty large.
Again, yes, sure, you could do it on multiple DVDs. But what if Heavenly Sword is a success and the sequal takes up 50GB? 7 discs? And what if it were a game where you could go back to all the different levels looking for bonus items you missed, stuff like that. Swap-mania?
Despite all the endless arguing to the contrary over the last couple of years. It seems to me people are clinging to this argument while it's being proven wrong right before their eyes.
That's the thing. The Wii shows that you can sell a console with last-gen hardware features plus one innovative controller. God of War 2 on PS2 shows that you can get pretty amazing graphics even out of a last-gen console. It all proves very little.
The only thing I will be able to agree with you on, is that it does take one or two great BluRay only or BluRay enhanced titles, or PS3 games being cheaper on BluRay, or whatever, to validate the claim that BluRay enhances gaming. Probably if Sony isn't able to show this at least in one or two games before 2008, it will become less and less important. But they definitely do at least have until then to prove this point.