IMHO, the next generation is overhyped.
Unlike the rest of you, I don't believe we'll see some kind of Quantum Leap from PS2/GC/Xbox to PS3/X2. Most likely, it will be the same kind of evolutionary progress that has been the norm in consoles for decades.
First generation PS3/XBOX2 games are probably going to look very similar to final-generation PS2/Xbox games, except for antialiasing and texture filtering, which will of course be higher. Before you jump all over me for saying this, I must point out that at the rate game graphics are advancing on the current-gen consoles (SH3, DOOM3, Halo2), the final generation of games for current-day consoles will look a lot more impressive than you think. Fully dynamic shadows, "polybump" textures, light blooms, projected lighting, pixel shaders for materials, reflection mapping, soft object physics, ragdoll physics, it is all fully possible in the current generation of consoles.
Most likely, the next generation of consoles will simply be an evolutionary improvement. The same effects will be used much more widely and with higher framerates, 4x or greater antialiasing, and texture detail/texture filtering. Instead of using tricks like light blooms, the next-gen will be able to use High Dynamic Range lighting to achieve spectacular looking light effects. The polygon throughput and fillrate will also be a lot higher, but I'd caution against putting too much stock in theoretical polygon throughputs - they are never actually achievable.
