The next-generation of consoles will do great things. We're limited in what we can do right now in terms of games and that comes primarily from the power of the processors.
The best way to put it is it's kind of like being given a Lego set with 100 block and a set with 1000 - you can do a lot more with the second set. You have more wiggle room and more blocks to make something big and great.
New consoles will do phenomenal things with physics; I know the guys at Havoc are just chomping at the bit. There are limits, for visual limitations there's texture memory, but games haven't progressed that far over the last decade.
I think the next generation of consoles are going to enable different types of experiences. If you can generate real dynamic crowds doing real things, you can't do that on the current generation of consoles. If you can have liquid simulations and better cloth simulations, and instead of rigid body animations have soft body dynamics, flexible joints... think about the type of gameplay that could be created with technology as an enabler.
Xbox 360 came out first this time and at least in North America they seem to be ahead. So this time around - and I don't have any insight - I'd be shocked if they didn't come out around the same time.
Then there's the dark horses like the OnLive guys who may get into that next round of TVs or cable boxes. There are latency issues with multiplayer stuff but they'll overcome those eventually, and if not there's still room for those cloud games.
http://www.computerandvideogames.com/321907/features/xbox-720-will-do-phenomenal-things-id-be-shocked-if-it-isnt-out-first/Wszystko fajnie, tylko niech deweloperzy nie zapomna o najwazniejszej (jak dla mnie) rzeczy, mianowicie kreatywnosci.