I think progress in VR is going on all the time its just not labeled as such because it is such an expansive category. If you look at the next generations of games that are coming out and the pushing of PCI-express and the new graphics cards, graphics are progressively looking closer to Reality. Now having said that that is only part of the VR question. Interacting more realisticly with that world is essential. We are seeing new steps into 3d Projection,almost holographic displays, and what I feel is the most important step experiements using brainwaves to control movement in simulated enviroments.
The techologies havent collided yet into a single form but when they all catch up to each other then we will have true VR.
Forget about Virtual Boy which as most of us no was neither true 3d nor Virtual Reality, also excuse the PS2 Eyetoy which are both just novelity items.