^^^ Completely agree with mugs.
It's pretty much impossible to quantify how much "additional untapped power" there is in either system. Both systems have plenty of power to make great games (both in how they play and how they look). As developers put out further generations of games, they will evolve new, more efficient code. The only way you can really judge things like that are after the fact. Sure, 10 years from now, we can agree on the "most advanced" game for the platform and compare it to earlier gen games... but really what's the point... who cares!
I'd also disagree with the statement that the 360 games haven't improved. Hell, in addition to the example mugs gave, look at Gears vs the trailers for Gears 2 (and that huge battle with tons of baddies on the screen).