Just a quick update, you really should spend a few minutes watching this presentation. Johan Andersson, Rendering architech at DICE, gave a talk called "Shiny PC graphics in Battlefield 3" during the last nVidia GeForce LAN. It's focused on the latest improvements the Frostbite 2 engine includes and I think it's a pretty good example of where the graphics technology is going.
Click on more to see the videos.