There are a number of factors here:
1. Consoles: The current generation are getting long in the tooth and if a game is going to be multi-platform then that's going to hold it back. So for most titles you can't really expect things to look any better than they did 3 years ago.
2. Development costs: Developing luscious, detailed environments is time consuming and costly. You have to draw the line somewhere if you want to focus on other aspects... such as gameplay.
3. The industry: Gaming is still in its infancy. We've seen rapid development. Especially in the late nineties where the bar was being raised on a damn near monthly basis. It's inevitable that things are going to level out.
4. The competition: What we consider good and bad is subjectively based upon what we're used to as 'the norm'. When we live in an age where most games are the products of multi-million dollar projects, amazing graphics become the norm then there is very little room for things to be impressive.
As a result I think that we'll see something a return to a focus on creating more imaginative environments depicted in expressive and creative styles as publishers try to distinguish their own titles from the competition.

I think you all missed the point in that quote. He wasn't saying that developers can't or won't push graphical limits anymore, he was saying that we, the gamers, have already seen plenty of games with stunning graphics before; making your game all shiny and pretty doesn't really impress us anymore. We want more than just good visuals, we want a good game.

I covered that with the fourth point. It's just that I consider there to be more to why that's the case than good graphics becoming the norm.

Okay, that's not how I read it, but if that's how you meant it, fair enough.

and why do you think that is the case?
cause we cannot push graphics like we did. so it cannot stun us like it did.
read article about directx11. showed two screenshots. one with some tech off one with tech on...
had to stare for few seconds to see the difference.
the time of HOLY SHIT LOOK AT THAT GRAPHICS! THE GAME WILL ROCK! is gone not because we smarted up. No.
It is because it cannot stun as it did. We almost reached the fully realistic level. At full Crysis is aaalmooost indistinguishable from real life. at least the scenery. and the game is how old.

Graphics absolutely can be pushed further. Do our video games look like the movie Avatar yet? No, not in the least. They could continue to make the games prettier as the hardware continues to get more powerful, but we just don't care about that as much as we used to, hence why graphically simple games like World of Goo or any number of games on PSN and Xbox Live have been huge successes, while multi-million dollar graphics extravaganzas have not.

yes game can be pushed further. never said it cannot. just not like we used to. how much did graphic changed since 2008? how much it changed between 06-08 and how much it changed in first half of this century...
don't think people got smarter or started to care about gameplay for some reason... nah. just new graphics cannot offer anything new. just little bit better than the previous generation.

I think we are basically saying the same thing here, we're just not understanding each other. I say we don't care about graphics anymore because we've already seen pretty games. You say improved graphics don't matter because they can't wow us anymore. That's pretty much the same thing as far as I can tell.
When I say we care about gameplay more now since the graphics aren't as much of a selling point, that doesn't mean gamers got smarter or anything, it just means that without the new eye candy to make us play games, there has to be something else to make us want to play games. Better sound design ain't gonna cut it, a better story might do it for some, but in the end, the better gameplay is what is going to do it for most.

I always like to refer to the 2008 released Prince of Persia. This is what happens when your art department runs amok and the developers throw their whole budget onto the graphics instead of balancing it on all important factors.
It's still considered as one of the worst shallow games released despite it's huge fan community because the game is just boring, repetitive and possesses a stupid plot and script. This isn't how a game has to be.
Graphics are overrated, they ever were, especially at big producing countries like USA and Japan. Shallow Hollywood blockbusters are the perfect example of that. If you compare those "mindblowing" movies to an actual well made European movies, you see the difference how a movie is treated as.
However, I am comming from the old Snes-generation so I know how important graphics are for the gameplay fun. One big example is Terranigma I heavily recommend everyone:
A simple action rpg game, but what made the game so awesome were the mindblowing graphics and maps. It was the Outcast of the Snes, one you could replay replay replay because you just find the game oh so beautiful.
My point is, what made a game always out for me were balancing gameplay,music,storyline and graphics at a perfect degree. I just replayed Cryostasis because it's one of the perfect games. The graphics were maybe overdone, but the story and the gamplay and the horrific athmosphere kept you playing it.
Today games lead by blockbusters are obviously not interested in creating games. Like this one fellow anon who told he was an Ubisoft developer said the Publishers " are hellbent on NOT making innovative fun games (it's always about how it looks, not how it plays)"

I liked 2008 Prince of Persia. Not as good as Sands of Time (which is definitely my favorite of the series), perhaps, but far better than Warrior Within.
I really don't think it's a triumph of art over gameplay design. Rather it's a logical extension of the gameplay mechanics of Sands that perhaps goes too far.

You better be joking. Warrior Within had a far better gameplay and combat than PoP'08. The story was also better.

You bring up a good point in that most games today are developed with marketing in mind -- how good it looks in a short trailer, etc.

PoP'08 was far better than the Sands of Time trilogy. They realized that the combat in all Prince of Persia games sucks hardcore (esp. Sands of Time) and deemphasized it as much as possible. The gameplay was fun, and not frustrating. The story was interesting (I liked the ending) and the art style was far superior.

I think we will still push the graphics for more 10-15 years, graphics and art (and this will add costs). Then we will move to real physics and so on. Of course I'm thinking PC here.
The console generations are what gives this wrong impression, that we are now stuck regarding graphics. The current graphics will be this stable for 2 or 3 more years, until the next leap, the next gen arrives.
And no one can predict how it will be on the mass market (consoles), it all depends of what sony and ms will do with their motion controls/whatever gimmicks. Will they update the graphics from gen to gen, or they'll just stick to the gameplay and evolve it, for example wii sports to another wii sports sequel...? No one can predict 10 years for the mass market.
I'm really disappointed that we are loosing quality from some products, because the consoles got hardware limits and thus limits the design process of the games. Want examples which I'm disappointed? Rage and Crysis 2 both consolized, Rage is more I guess.
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My post is a mess, but that's it. I'm just tired that people complain about PC hardware bc it pushes the graphics... but not so much people yell with all their forces about how the average graphics from consoles limits the whole design process of the games, limits for a worse product.
The devs work 1,2,3 years on such amazing models, amazing worlds, and then they have to scale it down to fit into those drm-boxes. The games to be eaten like fast food, and not appreciated like a slow food which took years to develop.