Pay closer attention to the lighting and shadows then.
Characters use just a few point lights, so their lighting is harsh and unnatural, often some parts are completely black despite standing in a sunlit outdoor enviroment. It needs some kind of image-based ambient lighting, perhaps even some global illumination fake, to keep up with games like Halo3, KZ2, or even Valve's HL2 series.
Shadows are very buggy - they flicker a lot and light bleeds through in many cases. Just look at the ears of Marcus as you play through the game, it's very disturbing to me.
Gears does look very good though, but it's mostly the result of the amazing texture work, relatively complex shaders (compared to other games), and the inspired design (
www.johnwallin.net). If they can fix the above mentioned issues, and increase performance, then Gears 2 can easily become the best looking console game so far...