Still, even with that, eventually they are going to come up against a ceiling I think.
Concerning that ceiling you were discussing, haven't the hardware folks (nVidia and ATi) taken note of increased development times due to all the work has to be done in games and thats the point for their development of CG and Rendermonkey?
True, the amount of work that has to be put into games is constantly increasing but its up to software companies to implement tools that take over some of the work that programmers used to have to do. Look at the latest Unreal engine... now you can directly export objects from Rendering progies, and 3D Studio max which is currently working on some similiar program for game developers.