When we say next-gen it is generally a minor graphical upgrade and some smoother animations. In the larger scope of things these aren't really next gen titles but more polished and refined current gen content. This content is the best we can get though, and we probably give developers more credit than they deserve. You may look at some of the current graphics and say "that is so realistic", but after the following video you will not be able to look at games the same. Do not say I didn't warn you, as this video will show you what the (very) near future holds.
Unlimited Detail Real-Time Rendering Technology Preview 2011
Rendering objects in science and medicine is generally done so with virtual "atoms" rather than polygons as it allows us to see a more realistic model. This technology is very primitive and doesn't allow for many objects to be rendered on the screen together, it is useless outside the confines of these particular uses. That is until a technology company from Australia decided to improve this technology, and allow an UNLIMITED number of atoms on the screen at once. This essentially means that objects in the game are built from virtual solid matter rather than wireframe models. Every tiny crease and minute detail can be replicated in a video game, this means your video games can look EXACTLY like real life.

What you just saw wasn't a graphical masterpiece, but like he said; they aren't artists. If non-artistic programmers can achieve this level of detail with the technology they have developed, imagine what large budget development houses could do. With the ability to scan objects from the real world to in-game, and have them almost literally impossible to tell the difference; now that is next-gen. All this is claimed to be able to run at 20fps on an average gamer's machine, but can achieve much higher and smoother results on high end builds.
