This article contends that the current generation of games (XBOX 360 and Playstation 3) fall well short of truly being considered "full HD" or "true HD". In fact, the vast majority of games run in 720p mode at best.
However, that's not the worst of it. In many cases, games are forced to run in resolutions that are sometimes much lower than 720p to begin with. Very few games are coming out that actually run in "true HD", that is 1920x1080. Both Sony and Microsoft are guilty of this.
This isn't to say that the consoles aren't "doing their job" or that current-gen graphics are poor. Gamers should realize though, that as far as gaming in full HD is concerned, we're not quite there yet.