I'd have to say Gears Of War, Oblivion and Kameo look pretty good as far as graphics are concerned. It's all up to the developers and they engines they use I guess just like PC games. Unreal 3 engine is surely a good choice for next gen games as it does seem alot more impressive than some of the other stuff out there being utilized. Hopefully we'll see CryEngine 2 being used.
If a developer is just going to use some half assed engine and not tap the power of the console then you just aren't going to get an impressive looking game. It is the first wave of games and it will take more time to crank out better looking stuff or at least I hope that's what it is.