The graphics improve last gen because we had black boxes -- i.e. developers couldn't figure out how to take full advantage of the chips. The consoles this generation are basically low-mid PCs in hardware (i.e. no black boxes) and have already proven to be limited @ 1080p/30fps and much of the features in the graphics API (SSR, GI, AA, SSAO, etc..) have already been implemented one way or another.
If you are expecting to see FF:Agnus, or Infiltrator playing in actual gameplay by the end of this generation, you will be disappointed.
And yes, while I agree they will find more efficient ways to do things, I'm not convinced we'll see more bandwidth used to raise framerates -- and even then, the game would look on par with what we see now, just run faster. We may see more features in a game at one time as opposed to now where you only see real-time GI in Alien, but no screen-space reflections, volume lighting, superior AA, etc..but I don't imagine ALL those features being in a game at one time by end of life cycle. I could be wrong though.. we'll see.