From an interview with The Verge:
The deeper, story-driven game will be driven by a much more robust graphics engine and more varied scenery. The end result, O’Connor told Official Xbox Magazine, is a game that pushes the Xbox 360 to its limits.
“We’re out of space, we’re out of horsepower, we’re out of everything,” he told OXM. “If you’re doing your best work that machine should be exhausted when you’re done, and we’re getting there.”
New consoles are brewing.