There's a number of different factors at play here:
1. Graphical technology is reaching a point where it no longer looks extremely rough around the edges; you have experiences like Uncharted 2, God of War 3, Killzone 2, Gears of War 2, etc that will look timeless even many generations from now -- I think with the HD consoles, gaming in 3D has reached the level of satisfaction and fidelity that we saw with the SNES generation. That is to say, 2D games stopped looking like absolute crap and now look very good and, as I stated before, timeless. I can still look back at many beautiful SNES games and I can't really say the same about the NES. Playing the PS2 and PS1 generations, 3D technology still looks very rough to the eyes, partially due to image quality but also because of the simplicity of the graphics themselves. This isn't to say that graphics don't have a long way to go -- they do, only to suggest that graphics have reached a very satisfactory level of visual appeal.
2. More importantly than graphics, however, is how we experience games. Graphical technology has been exploited tremendously, but we still have yet to push boundaries with how gaming will transition in terms of an interactive experience. We are using the same controllers (for the HD systems) that was established for the most part a long, long, long time ago. So while graphical tech has increased, the way we experience games genuinely has not (outside of the advent of online multiplayer gaming). With Microsoft and Sony trying to play catch up to the Wii in this regard, I think it's pretty clear that pushing graphical boundaries is no longer the best business move and that consumers are expecting new ways to interact with products rather than having slightly better graphics. And establishing gaming experiences with Microsoft's Natal or Sony's wand is not going to be something that happens over night; support for these devices will take a long time to materialize in software, and developers will continue to think of new and exciting gameplay experiences that can come from 1:1 motion controls.
Given the second point, I don't see a new console generation starting before 2014. Microsoft has already mentioned that they see the Xbox 360 lasting through 2015, and Sony's 10 year lifecycle would put them at 2016.