I donno, personally looking back at some of the crappy textures and blocky models from PS2, I could see calling PS3 stuff a 10x improvement. Of course, if you want to get down to raw computing power, PS3 is probably 50x the power of PS2 to show that 10x improvement. With diminishing returns on power/visuals I can see it taking 100x+ the processing power to show the same 10x improvement. Honestly I don't see them hitting more than 15-20x the processing power with the constraints they have. Seems to me that the best area to improve would be productivity, easier development, and allowing devs to get more work/graphics/code/ect done in the same amount of time. Devs spending a couple years to make short games that look great, how much of that is time wasted tweaking and tuning code for system intricacies and bottlenecks?
Carmack might have had it somewhat right with the idea behind Rage, although the first implementation is pretty fail. Making a engine where you can just let art and idea guys just go to town without worrying about the tech side of things, seems like if you perfected it you could really get unique stuff done quickly. I wonder if one of the next gen consoles will take that lesson to heart on the hardware side of things. I'm probably rambling here...