We are still very limited in what can be done. The amount of models on screen at any one time, the field of view, interactivity of the environment, etc. More processor speed, better GPU's and more ram will all lead to more realistic and fine grained physics, larger interactive environments, 3d displays, faster load times, you name it.
People said the same exact thing with the ps2, the pentium, all that outdated tech.
We have a long way to go yet, these primitive consoles are just the tip of the ice berg. Its not just how many "p" the resolution is. Its about the complexity that can be achieved, the depth of the experience. PC's are far better at this than the current consoles, and thats with current technology.
The next Call of Duty would REALLY be that much better if it didn't slow down with so much on screen at any one time, with fuller more interactive environments, very fast load times, hyper realistic physics, far more advanced input devices, 3d immersion, voice commands to AI squad mates, the list goes on and on.