I think the biggest surprise is that it looks better at all considering for months people have been trying to convince us that the 360 GPU is superior to RSX.
I dont think people said the Xenos was superior to RSX by anything major, what has been a key point that people have been trying to get across for months is that the RSX wont afford the PS3 any huge advancements in graphics compared to the Xbox360 and that both systems will look similar in terms of the best they can produce.
I too dont see what the hype is about. Looks pretty close to the Xbox360 to me. Considering Xbox360 is in third person, and thus rendering two models, and this is in first person (i have that right?) i would hope they spent the extra power in some way.