How long was it before current Gen Consoles really showed what they could do ?

For me, it was Gears of War for the 360. I was amazed by the lighting and textures, especially outside with the stone columns and landscape. Compare that to the launch titles like Quake 4 (which ran at about 15 fps half of the time) and the Burnout up-scaled port. Honestly, when I got the 360 at launch I started to have serious regrets about its power until Gears came out. I think we are repeating that phase when this next gen of consoles.

On the PS3, I was blown away when I played Uncharted during the infamous waterfall level. MGS4 also really impressed me along with Killzone 2 the following year. Those titles made me realize that the PS3 could actually be a gaming console rather than a 600 dollar Blu-Ray player. :p

Overall, last gen was impressive for me until the Nvidia 8800GT was released. That card could match the GPU in the 360 and from then on it was the PC who took the lead.
 
Gears 1 for me. I'm going on record to say the next gen will show some jaw dropping lighting. The type of lighting that makes you ask, "Is this a game?" There are certain games in this gen on all the platforms that made me say, Damn! imagine even better textures with this lighting. Dark Sector, GTA5, MW4. In MW4 there was a scene in the subway that made me think, too bad the textures take away from the scene.
As gamers we tend to see what others don't. I've had people ask is F1 CE, Gears2 and many sports games if it was real or a movie. (Keep in mind they don't game and can't even see banding on some lcd tvs) until it's pointed out to them.

Right now devs may be using more straight forward use of the hardware. Ryse 2, Killzone 5 and many multis will make some games look spectacular in just lighting terms alone.

Nevermind the ai and physics part adding to the equation. The PC will obviously contribute to the above also look at modded Skyrim and GTA4. All of this is going to push the looks of games overall to newer heights.

Gamers ourselves are going to be challenged even more later on this gen. Not saying we're photoreal just saying there are going be some that get a little closer than we expect is all.
 
Once Gears, Mass Effect, and Uncharted 2 came out I think there was a clear difference at that point. After that the improvements weren't as big.
 
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In terms of online play I think it was when Modern Warfare launched that we really hit the next generation. Like it or not, COD shaped this generation online.
 
PGR 3 impressed me at launch but it was Fight Night Round 3 in early 2006 that really showed off the 360.

It was the 'second wave' of games 6 - 12 months later - FNR3, GRAW, Dead Rising, Gears of War etc - that made you realize the generational difference.

This.
 
Both consoles are lacking decent drivers hence Deadrising 3 issues, etc. Hopefully we can the right ones so devs can get in full gripes with the hardware capabilities. With that being said probably in 2 years we'll see a huge leap when next gen is in full throttle. IMO you can already see the potential certain titles like Ryse and Infamous Second Son.
 
The first game on X360 that wow'd me was Ghost Recon Advanced Warfighter, on PS3 it was Uncharted: Drakes Fortune.
 
Deleted last several posts between Jimmy and RedSilentScope because it degenerated into personal insults. It's not really on topic anyway. The OP question is about consoles, not PCs.
 
I think the current consoles have really only been squeezed for every bit of horsepower within the last year or two. It takes time for developers to master hardware, and as soon as they do, new machines seem to always be right around the corner.
 
It's hard to say how long, because it just keeps getting better. I didn't think Uncharted and Halo 4 could be topped, but the new Tomb Raider proved me wrong. It seems that they keep squeezing each and every year. I figure they have come close to the limits though.