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The Downloadable Content Rumourmill
Despite the high hopes of Xbox 360 fans Gamespot pegs it as unlikely that Lumines Live will drop this week, or that there will be a Gears of War Demo on the Xbox Live service. In news that does seem to be legit, though, you can see screenshots of the first downloadable games for the PS3 service over at Game|Life. Titles include the previously mentioned fl0w, Lemmings 2, Blast Factor, and Go Sudoku. Commentary on the games available at GameSetWatch.
You seem to assume that CPU and GPU upgrades can't enable new gameplay ideas. Here's a counter-example to that thesis: Dead Rising. Dead Rising would not seem to be possible with the previous CPUs and GPUs present on "last-gen" consoles (or "next-gen" Wii's, for that matter). The gameplay is completely influenced by the several hundred zombies milling around you constantly, and ends up creating a totally new experience.
You don't even need more power to create this kind of paradigm shift, either. Xbox Live, especially the better version for the 360, totally changed the way console gamers thought about online services, with integrated chat, matchmaking, and content downloads. There's a lot of room to improve without a fancy new GPU, CPU, or controller. (It's worth noting here that the Wii takes a giant leap backwards on this front with the generally maligned Friends Code system. Does that make it "not next-gen"? I think not, but it's worth thinking about.)
Further, a controller is just an input. It doesn't magically make things more fun or "take gaming to the next level". Good developers do that, and a good developer can work with whatever inputs they have access to. A wiimote is not more fun than a steering wheel, a gamepad is not more fun than a DDR mat, a joystick is not more fun than a mouse and keyboard. They're just inputs. That's it. Ascribing mystical properties of "fun-ness" to them is silly.
So, I disagree with your idea that a new controller is somehow more next-gen than anything else. It's a self-serving rationalization by Nintendo fanbots, in my experience. What makes something "this generation" is relative release date, nothing else.
Plausible conjecture should not be misrepresented as proof positive.
There's nothing 'fancy' about the fucked up 360 graphics system.
It is an architecture designed for 480p that Microsoft is forcing 360 developers to try to write 720p games for. There is only 10megs of EDRAM in the 360. That is the right size for a 4XAA 480p framebuffer to sit in. If you are forced to write you game to support 720p you have to either give up decent AA or implement a tedious to write and performance degrading tile renderer to fit your framebuffer into the too small EDRAM on the 360.
So what you get on the 360 is 720p games without any decent AA leading to jaggies all over the place. Which leads to developers putting out bullshit marketing shots that have massive amounts of AA that isn't in the real 360 game. The two most egregious offenders are Gears of War and PGR3. The difference between the bullshit marketing shots that everyone sees posted on the net and the real in game graphics is criminal.
None of this would be a problem if Microsoft would let 360 developers write to a resolution the 360 can handle - 480p. Instead they want a bulletpoint to try to portray the system as more powerful than it really is. So you end up with a library of 360 games with:
* Jaggies everywhere on most games
* Sub 30 framerates leading to...
* Screen tearing due to vsync having to be turned off because 30fps not being able to be consistently maintained
* Affine texture filtering being turned off to try to get the frame rate up to 30fps
The 360 is a nightmare for developers to work with.
That's interesting that you say that the 360 is a nightmare to work with...because John Carmack is on record as saying that it has the best IDE and programatic support of any console he has ever seen. I think I will take Mr. Carmack's opinion over that of an anonymous coward, no offense.