There's more to new generation hardware and gaming than just visual appearance.
It's not just about graphics getting better, but current quality graphics running smoother in games with better gameplay and a large scope of things that are permissible with those graphics.
For example, the visual effects for
Babylon 5 were created on Amiga computers (and Pentium PCs) in the early to mid 90's, but it would take many years and much more powerful hardware before that level of graphics would be accessible to gamers in an actual game with random, spontaneous gameplay and higher than TV frame rates and resolutions.
The level of graphics in the Autovista and Photo modes of
Forza 4 and
Gran Turismo 5 is spectacular, but we won't even see that level of graphics combined with 60fps gameplay for a couple of generations.
Forza Horizon needed to half the frame rate of
Forza 4 (60fps to 30fps) to allow a similar level of graphics to be utilised with an open world environment with day/night cycles and dynamic light sources. With next generation hardware, those sacrifices won't be necessary even if the quality of graphics doesn't improve much.
I think to a certain extent, graphics have reached a plateau and we won't notice as much of an improvement in them as we have done in previous generations, but we will notice more quantity than quality, we will see things done in greater quantity with quality graphics that simply aren't possible with current generation hardware - even if it's just higher, consistent frame rates, persistent decals, debris and corpses and more realistic particle effects.