It seems to me that the main problem here is that people can't comprehend the difference between a tech-demo, concept art, and reality.
Tech-demos exist to show the power of the hardware. They concentrate as much as possible of the available computational effort at a single effect to provide a targetted demonstration of what a machine is capable of. Clearly you can't then assume that the same level of quality will exist when that effect is used on 100 characters at the same time within a complex enviroment and a game running AI and Physics... If the machine had enough power to do all that at the same time then it would use that to make the tech-demo look *even better*.
Tech demos also exist because it's a lot easier to write an example of a single effect on a bit of prototype hardware, than it is to write a whole representative game-segment... especially when you only have a small team of engineers, limited art resources, and almost no time at all.
So anyone looking at the PS2 tech-demos (which to the best of my knowledge were all running on actual hardware, even if some of them were just streaming pre-transformed data at a GS) and expecting to see the same quality in every aspect of every game made since, is going to be disappointed. From an average-joe with no technical knowledge and only a tenuous grasp on logic I guess that's understandable, if a little naive. For people who hang around a technically oriented board like this, you should know better. Shame on you.
The PS2 tech-demos were on actual hardware, therefore they are quite emphatically not BS. They also probably were *all* supassed in terms of utilisation of the PS2 hardware at some point in the PS2's lifespan, it's just that the power was spread across an entire game and not focussed on a single face or character.
To go from "here's a tech-demo of a face", through "faces in games don't look like that", to "Sony are full of s**t" requires a level of ignorance and denial that makes me despair.
Concept-art meanwhile exists to give an *impression* of what something is supposed to look like when it's finished. It exists because if you showed stuff how it looks for 90% of the development, especially before hardware is finished, it'd look rubbish - and imagination doesn't cut much ice in marketing. Concept art gives you something to aim for in development, and something to show externally to demonstrate what you think a product will look like.
The reality is that if the hardware was complete enough to run games like KZ2, and those games were advanced enough in development to be demoed in realtime like that, then the console would be releasing a lot more promptly than "next spring". Either that or everything is going to get another 6-months to a year of polishing and thus is not representative of the final product - which means they'd probably want to tart it up even more to give a more accurate view on what it will look like.
The fact it, any concept-art is just a guess at what will be acheivable. That doesn't make Sony, or anyone else who produces such (which is, to be fair, pretty much every company in the industry) "liars".
What's important is how such demos and concepts are presented and what is said about them. It strikes me that most of the "BS" that is said comes not from Sony, but from the press that prints unfounded stories and rumour, or misquotes from a badly translated interview, or "exclusive source" that turns out to be some idiot in the QA dept. who met a journo down the pub and fancied a free pint.
There are several "facts" being presented both here, and even in some supposedly professional publications which I know, from personal experience, to be total fabrications with no basis in reality. Yet no doubt 5 years down the line we'll be here debating the "lies" Sony told about PS3 and why it never met them, even though these were constructed by 3rd parties and never actually stated by Sony themselves.
It doesn't help when concept-art is released and websites or magazines publish it with "screen-shot" in big letters, though even the most idiotic of editor ought to know that the PSP or PS2 doesn't run in high-def/print resolutions with full AA...
Some unscrupulous (or plain stupid) marketing departments might try to pass rendered concept stuff off as screen-shots. But on the whole I expect they just release some media packs with a bunch of art in, and editors just kind of make stuff up as they go along, because quite frankly an amazing screen-shot sells just as many copies of a magazine or gets just as many hits on their site as it will sell games...
It was pretty clear to me from watching the conference that the demos which were real-time were stated as such, and the handling of controllers and so-forth was made obvious so as to prove the point. Everything else was clearly running off video and probably pre-rendered (as opposed to recorded). It was said that these were visions of what the game companies thought they could produce on the platform. There are probably a variety of different ways in which companies approached that.
Some are no-doubt rendered entirely in art-packages, using features which may or may not be possible to emulate in hardware at decent speed. Some are probably prototypes running on PC, perhaps in real-time, perhaps at a slower frame-rate and frame-grabbed. Perhaps a few are running on prototype hardware already but not fast enough or reliably enough to show live. All just represent the aspirations of development teams who have been given specifications of a bit of hardware and asked what they could do with it. And they were presented just so.
If KZ2 had been realtime, you can expect that they would have shouted about it. Instead it was a segment of video in a sequence to show what some popular games might look like in their next-gen incarnations. Does this mean we'll never anything that good on hardware? No. It simply means that at this stage they haven't yet acheived it, but are working towards it.
It was clear to me from the specifications listed and the tech-demos running on (presumably unfinished) hardware, that Sony are well on the road to delivering a very powerful console. Some of of the numbers are no-doubt creatively arrived at, but no more so than for their competitors.
Mostly what they've done so far is to make public their *intentions*. Sometimes they might suggest something which is beyond what they will finally deliver. I don't think that the inability to accurately predict the future consitutes lying, I think it's just an unfortunate tendancy to want to disclose intended features before they're quite ready, which sometimes isn't going to pan out how they expect. To be fair I think Sony are probably *less* guilty of this than some other people I could mention.
They set lofty goals, they try very very hard to mee them, and they generally only go public when they're pretty sure what they're going to be able to actually build. On both PS2 and PSP they actually upped the spec before release.
Any you can't criticise a company for hype either. It was a PR conference to promote a new product they have coming out, which faces stiff competition from an already announced competitor. Of course they're going to hype it up a bit. If you don't understand the concepts of marketing then you really aren't going to survive in the modern world... also, I have this bridge for sale that might interest you...
In short, if you think concept art directly translates to final product, you might be a little naive. But if you think a tech-demo running on actual hardware in some way constitutes a lie... then you're an idiot.