There are a number of factors there.
The browns and grays really started in the ps2 gen. Right after coming out of the low color bit-depth of the previous gen, devs and artists were finally able to work with subtler hues rather than the cartoony over colorful look of ps1 games. Add that to the crippled texturing capabilities of the ps2 and it's lack of anti-aliasing, that system just begged devs to go for low contrast palletes, but really at that time (pre-HDR rendering) those grayish brownish or bluish palettes were the easiest way to accomplish a filmic look, and better overall mood. There was not much post processing, and lighting was rather simplistic at the time. The textures themselves frequently were colored specifically for the scene they would be used one. A night-time level? So your grass texture is gonna be blue.
At the start of this gen, devs were simply still used to that way of making things. You gotta realise that one of the biggest influences on the design of the very first gears was resident evil 4, a game that was actually a bit more colorful than most on gamecube, but still had that contained "filmic" style. As gears got more sequels (just to stick to that example) it manage to find its own style and personality, and it realized and accepted it was more on the actionny, corny fun side than on the dramatic, scarry, serious one. So hence bring in the colors, you are here to have fun! What's more, UE3 got lightmass between Gow2 and 3, and that completely changed the artist pipeline, and the final look of lighting. Artist didn't have to spend most of their time setting up fake pointlights everywhere to get the whole level well illuminated, true radiosity was calculated for them automatically (though not instantly). Faking out radiosity through artist chosen point-lights in a convincing is not easy, even more so if you are going crazy with colors all over the place. Sticking to a more kept lighting makes it much easier to get away with poor GI. This is true to gears, but also to many of the UE3 games, and other engines too. coming from ps2, few devs had very god GI (Max Payne was an example of a ps2 era game with EXELENT lighting, but a rare exception).
The other great technological evolution that happened during this gen was a great improvement of HDR rendering tech, tonemapping and such. There was really not many real time implementations of this in 2006, and very little know how yet. Devs were still struggling to get their gamma sorted out. Now most graphic programmers are well versed with this stuff, and multiple games have been released with exellent HDR and tonemapping to show that it can be done, how it can be done, and most importantly, that despite the hight costs it can pay off greatly. It was not impossible to make a game in early 2007 full of lively colors and lighting with the tech available at the time, but it was very hard to do it and have it look right. It often just looked weird and amateurish, almost n64ish. The lighting tech devs have now, allows them to have color and a filmic look at the same time, without too much tweaking of individual lights and textures.
Artists acquired know how of what works and what doesn't with today tech, all the deferred real time lights they can add, post processing, HDR and all. Similar learning curve is going to be noticeable during the next incoming console gen. I believe the first bunch of ps4 and Durango games, although impressive in many areas, are still gonna carry some of the ps360-development-best-practices influence on both their tech and art.