I don't expect every single game to be a brand new idea, because it leads to poor game mechanics, poor story or simply a poor game if done badly. What I do want to see however, is improvement. Was halo 3 origonal and innovating? prehaps not, but it polished the mechanics so that you can perfect every aspect of it and at the same time find everything easy to pick up. Because of this, it is pretty much the first game everyone thinks of when they think of a shooter-not because it was brand new, but because bungie looked at halo 2, saw what worked and what didn't and improved on it.
On the other hand, innovation is a great way to start up indie companys. I don't mean cosmetic innovations (I recently saw a game on steam that was set in WW2, where allied forces went against nazis who were assisted by dinosaurs. These dinos could easily have been replaced by buggies, from what I saw from trailers and screenshots) but mechanical ones. A great example of this is the metal gear series, back when stealth games was literally untouched, and a brand new idea. Everyone else found it great, and became the behemoth we know today.
But to say that innovation is dead? Thats a huge no for me. Just weeks ago, portal 2 showed us how gels, jumping plates and vents can all be used in ways never seen before, and as mentioned the universe simulator. Innovation isnt always a good thing, but its still live and kicking.