My first reaction was to disagree with you, but after I thought about it, Gran Turismo looks about the same in 480p as it does in 1080i (my TV doesn't support 720p). I would imagine that all things being equal there wouldn't be much of an improvement over current HDTV owners.

But, I don't think that most gamers are going to be looking at it that way (going from current-gen systems on an HDTV to next-gen systems on an HDTV). It's going to be more like going from current-gen systems on a normal TV to next-gen systems on an HDTV. How many people with HDTV's have component cables for their current-gen systems? I do, but gamers I talk to don't even realize that their current-gen systems would look better with a component cable (most Xbox games are progressive scan and several PS2 and GC games are as well).

The difference between composite video to s-video is definately noticable on any decent TV over 25 inches, and the difference between s-video and a 480p signal is even more noticable on my HDTV. Basically, I think (for gamers) this IS the equivalent jump as the VCR -> DVD transition was for movie-watchers.

This assumes of course that most next-gen consoles will be played on HDTV's.