"Chief among the improvements in [the Playstation 3's] visuals is a strong focus on HDRI (High Dynamic Range Images) For me, this is more important than any other effect a game could have to immerse you into it visually. Some PC games are starting to experiment with HDRI but the results are not quite there yet. PSX 3 has it down and it's magnificent to see in action.

To achieve more realism in games, it has been traditional to use larger and larger texture maps, which don't pixelate as badly when you get up close to them. PSX3 breaks away from this ball and chain of ever decreasing performance through larger textures which become harder to shift around in real time by finally realizing nVidia's dream of a purely shadier powered environment.

PSX 3 has enough power to rely completely on pixel shaders to adorn its 3d models and together with HDRI and real-time soft shadows, modest use of texture mapping types and volumentrics/caustics you have a realism that really has never been seen before in not only a console, but any PC game either."

This article provides quite a compelling argument for the PS3, and elaborates on why the heads of Sony call Xbox 360, Xbox 1.5. It focuses on the details the PS3 will be able to provide. The piece is PS3 biased, but the author hits on some things that have not been discussed to death.