I think resolution is an entirely different subject. Lately it's been leaking into the software side of things, when it's traditionally been dependent upon hardware, specifically the monitor. The software side of it has only come to light in terms of bad DPI scaling, which really doesn't matter. You can still display lower resolution icons on higher resolution monitor with little to no actual impact. It can always be fixed, just as games that originally didn't support higher resolution displays could eventually support them (like Diablo 2). While I do agree higher resolutions are awesome, that still remains almost completely in the hands of the panel makers.
The software and hardware dynamic for gaming, and software in general, are driven by one another. Sometimes faster hardware pulls software along with it, sometimes the drive for faster hardware through software pulls that along with it. Resolutions almost completely remain on their own little island and I would really like better ones, but nothing is holding them back but the panel makers themselves.
Consoles as someone else mentioned are what's currently holding graphics back. The trend you noticed was consolization, which took place with the last generation of consoles being released and PC gaming being proclaimed 'dead' and almost all the devs jumped ship.
With the next release of consoles and Steam making its move on the HTPC front, we may see them die on the next iteration. With that I can see two distinct avenues that will be further persued.
One is physics. While this isn't directly related to eye candy in the traditional sense, it has a HUGE impact on gameplay and gameplay dynamics. It is amazing what a little bit of real life can do to change a game and while consolization killed off the first round of physics, including PhysX, which could've turned into something huge, it still has room for a resurrection. It's unfortunate that Ageia came a tiny bit too late to the party or a bit too early.
The second is Raytracing. While raytracing is still in its very early stages, it has a lot of potential once it goes mainstream. Projects like OpenRT are helping aid this, but once again this wont see the light of day till either consoles die (as they don't have the hardware to do raytracing and probably never will) or a one hit wonder comes out that really takes off, like Angry Birds.
It doesn't help that cartoon stylized games are becoming a rage as well. Games like League of Legends, World of Warcraft, and Heroes of Neworth do almost nothing to push the graphical envelope. Even Teamfortress 2 to a certain extent does that. But I would argue that TF2 is stylized in a cartoon fashion, but has a lot of graphical bells and whistles.