We've played 1/4 SD resolution games before with Mario Kart and Hired Guns (Amiga game). Now we have the capability to offer each player own SD screen at the same time.
And TV's are bigger as well. I remember playing Mario Kart DD on a 15" CRT with 4 players (480p) and before that Mario Kart 64 on 27" CRTs (480i... if that, probably more likely 320x240). We now have a 28" widescreen 1080p monitor so that is 14" widescreen @ solid resolutions.
I guess we are kind of lucky on the 360 side with 4 player MP in Halo 3 and ODST (2 player coop same console). PGR4 and FM3 offer splitscreen with AI. Sure, only 2 player, but that is a looot better than most racers that don't have any splitscreen, let alone with AI. Btw, Up! and Baja Edge of Control are 4 player splitscreen (although Baja stinks on the PS3, bit better on the 360).
Can you network PS3's to play R2 with 4 player coop? Even if you could, that's a fair bit of faf to require a 2nd PS3 and 2nd TV.
Crazy, I know. Then again with Monitor support (and having spare monitors) when I can snag a couple 360's cheap ($100) I would like to setup a "Daytona-Arcade-Booth-Clone" with Forza. Instead of jumping on a $400 new console in 2013 setting up our own little LAN party on the cheap would be pretty fun. Sure, the new consoles will look great but it will be a while before they introduce "must have" gameplay.
So maybe you can console yourself with the LAN element of a lot of this gens games--soon you will be able to just throw down an extra console for party games.