Many may say that the difference between the current gen consoles and the previous generation is bigger than what the difference between current generation and the next will be. I think that's only true resolution-wise. Here is one very good reason:
No resolution-jump: Take a look at the, for example ps1 and the ps2. Although the ps2 were capable of higher resolutions, most games were in 480p since most TV:s at launch, weren't capable of handling higher resolutions. Therefor the graphical enhancements were put into other things than resolution. Today all new TV:s can handle 720-1080p, at least in the wealthier parts of the world. This will mean that the next gen console won't focus on outputting a resolution higher than that, although this will probably added through a firmware update if a new resolution becomes standard in the lifetime of the next gen consoles.
So what does this "no resolution-jump" mean for the graphical quality of games? It means a lot, and I am no professional, but I can describe a few things.
Tessellation: This is a great, computational power-saving feature. This will greatly enhance the drawing-distance, among other things, in the next gen. Tessellation is a DirectX 11 feature for PC's today. Some Tessellation can be done today on consoles, but not to the extent that it really matters. This is a feature that will be present in the next gen.
Possible ray-tracing: Ray tracing is not only good for simulation of lightning, but the algorithm used opens new doors to parallelization(which basically means better performance from multi-core devices). More calculations per cycle can be done and the more calculations, the better the graphics. Basically. Please correct me with comments if I am wrong^^ As I said, I'm no professional.
The return of SSAA: SSAA (Super Sampling anti-aliasing, also known as full-scene anti-aliasing) was cut from graphic-cards with the arrival of DX8 due to the amount of computational power required. It has been enabled again in the current graphic-cards, but are almost exclusively used on older games due to the cost. SSAA provides the highest quality image of all current anti-aliasing techniques and with the progress being made in computation today, this is a feature that might finally be brought to consoles.
Stereoscopic-splitscreen: 3D with glasses is stereoscopic 3D. Stereoscopic-splitscreen will make it possible to play more than one person on the same TV without having to split the image in two. I know that Sony filed a patent for this a year ago or so, (or was it 2?), but I'm sure Microsoft will find a way to do it their own way. This is a feature that is NOT possible without glasses.
The next gen will bring the long awaited 1080p 60fps -games. It will be a minimum for most games. If there is no increase in resolution the added computational power that the next gen will bring has to go somewhere, into features like the ones I mentioned above. Please add your own thoughts about new graphical features in the comments below :)
Cheers! / A