Caillan: That "20 Million on 8.5k" is called normal mapping and already included in games like Doom 3, Far Cry and AFAIK Battlefield: Vietnam. As Doom 3 shows, that is possible on current gen technology, but only very ugly (texture resolutions become more important with normal maps). It's pretty useless for less detailled styles (cel shading, for example), though.
RPGFreak: Why would XNA give them no excuse for bad games? It only provides the user interface and graphics/sound stuff. It gives them less of an excuse to make bad engines, but crappy, buggy games will exist even with XNA (it's not a magical "make it fun" toolkit).
XNA speeds up the engine coding, but many devs already use toolkits, either developed in-house or licensed, that essentially do the same. Just because no Renderware game matches those XNA demos (since they're built on older hardware and are actual games) doesn't mean it can't do the same as XNA.
The point of XNA, AFAIK, is the synchronisation of tech specs and input devices. XNA games will be designed for a reference controller design Microsoft supplies and will likely work like crap on other controllers or need to be adjusted for each device independently (which is exactly what XNA is supposed to prevent). In other words, they expect Sony, Nintendo and PC gamers to use their gamepads.
esides, I wouldn't trust Microsoft when it comes to standard libraries. They have proven over and over again that they are capable of adding "features" that allow for quick virus spread and serve no legitimate purpose. I still don't get why the RPC manager accepts outside calls without requesting authentication or why ActiveX doesn't run in a sandbox (that was even an official feature and "advantage" over Javascript, ie. "You cannot format the user's harddrive with Javascript, but you can with ActveX! Hooray, feature!"). MS calls it trustworthy computing, I say it means "I'll trust you that this file is completely harmless and run it without asking my user".
You can patch an OS, but patching your console every month to not get infected by virii over the internet is a bit much.
Also, the bottleneck in game development isn't engine development or game logic, it's the art assets and unless they include that magic "make art" button that EA has been trying to code for such a long time now, they won't be able to speed that up.