Unless Sony has a very very intuitive developing program, I don't see "Toy-Story like-graphics" in their future. Developing for it is going to be a bitch. And to make a game that's amazing graphically and gameplay-wise may take a whole lot longer on Sony's machine than the REV.
I am assuming the REV will be manufactured with developers in mind, and un-like the GameCube era, I see that really helping Nintentdo. Nobody wants to spend a year on half a year's work, and Nintendo could capatilize on that concept.
As for Sunshine graphics.....did you see the water?! The game was based around that aspect, and the graphics proved it. I admit that the textures were bleak, but who cared during Noki Bay? That level was beautiful.