I've heard it said more than once "Graphics doesn't matter anymore for games...".
Improved graphics in games is like all the other components of a platform. The end result of a bunch of these various factors: screen size, audio, gameplay, level design, ..., amount of memory, make the game experience.
Gameplay for humans takes place on whatever platforms we have. We had dice made of ivory and marbles made of stone and jacks made of steel and now we have games made of silicon and plastic. Games allow us to engage and teach early and provide a form of play that should probably sit somewhere in maslow's hieararchy around the self-actualization and esteem building component of the pyramid. This gets lost because so often in order to get there we engage in shooting things. Most games aren't about shooting things they are about solving conflicts or figuring out puzzles.
My point, poorly articulated above, is that the argument that there is some platform that suffices as complete for gameplay is backwards. We define as a society what to create playable experiences upon first, then we create forms of play with those devices, not the other way around. In other words, games track technology...it tracks the current social and industrial capital. Therefore, there will be no point at which games will have 'whatever they need forever'. Furthermore, the creation of both games and productivity at each level is what inspires the components of the next level. Our need for play is just as important as our need for production, and it is neither silly nor incorrect that the future of our silicon be driven by one need or the another.
Looking at the Wii and the xbox, basically two larger form factor gaming platforms of this era is really looking at two points in the design space and creating a set of interesting, mostly playable experiences. One doesn't kill or outdate or outmode the other one. The amount of ink spilled on these arguments is silly. its all uninsightful, unthoughtful noise to generate pageviews on the lower rungs of the information hieararchy. Furthermore, boardgames, cardgames, etc will continue to evolve with society, exposing us through play to social norms of the day. They give us a safe place to explore leadership, spirtuality, magic, power, loss, winning, sportsmanship, relating with others, and the whole host of other lessons in life we need to survive and succeed.