I believe the online play defines next gen console.
Getting people online or at least giving them options to do so will makes gamers go back for another round with real people. Sports, Fighting games would benefit more then others. Right now games like Warhawk are great online fun.
It brings people together. So, improving Online capabilities is a way to go in my mind.
Another aspect would be Innovative games. Fun and enjoyable titles. Little big planet is a perfect example. Graphics can only go as far, of course it's important but it sits on the lowest level of need in my mind.
Folklore has rich environments and it's "stylish" and enjoyable, immerse.
Next Gen needs to bring back the Story. If a game has emotional and strong story behind its visuals then it will be a hit.
Good game is redefined by three things in my opinion: Gameplay, Story and Fun factor.
Graphics shouldn't be the only factor today and in future, they should "enchant" the good story driven game to give us emotional and life-like satisfaction. ^_^
Heavenly Sword anyone? Story, Style, Gameplay and Fun.
Games like will make Next game enjoyable, there is no need for perfection. Streaming towards it is a right step forward.
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