Why does physics require an impact on gameplay to be worth doing? If you want to see some excellent physics modelling in games today, check out some of the top tier racing titles. Extremely accurate physics IMO are going to be very nice for things like foliage that moves instead of clipping through it etc. Suspension of disbelief is the big thing I'd like to see physics help out with. In terms of game changing dynamics, most people point to destructable environment. I had that back in the mid 80s with Super Mario Bros, I'm looking for something a bit beyond that
While I do appreciate enhanced visuals, they are certainly not the most important factor for me in regards to the enjoyment I extract out of my games. Fluttering cloth and interactive dust is nice and all, it's just not where I'd like to see advanced physics implemented when there are other much cooler things that could be done.
I like the physics interactions in many racing games, (I think Grid did a fairly nice job) this contributes to it remaining one of my preferred genres of game, although, obviously a good physics implementation won't make up for a poor game, but this is true of any genre.
I think why a lot of people point to realistic (or at least more realistic) destructible environments is because, well, that is genuinely what they want to see. Like you said, suspension of disbelief is important, and I think that destructibility is one of the best ways to accomplish that, and it also changes the gameplay in a pretty big, and, to me, fun way. I would love to see realistic interactions with foliage in games (as well as landforms and all sorts of other things), but I'd rather see realistic interactions with buildings first. I don't know about you, but I was massively entertained by the destructibility in Red Faction: Guerrilla, I'll admit it could have been better, particularly in density, but it was still quite good.
GPU acceleration of physics is something that I support, and an open implementation I support even more, but I think that all the fluffy aesthetic uses for hardware accelerated physics should probably be done after we get some more substantive stuff out of it.