Ok well there's a lot of things to be improved upon: character development, AI, open-ended storylines with impacts from player choices, real-world exploration and dynamically generated, physics, interactivity, and of course on the technology side, there's the immersion provided by sound and graphics that is always on the uptake. I'll admit that there's a slight plateau with the last generation and the current one, and we aren't seeing a whole lot of difference just yet apart from gimmicky little things.
BUT, we also have to admit things have come a very long way indeed. Ok, maybe there are only a few shining stars at the moment that really stand out and try something new or different, but the story telling has actually matured quite a bit. If you look at the games of the previous generation, and try looking back even further, the norm is that you still have to *have* a story, no matter how crap it is. This is not taking brilliant examples from the past that were ahead of their time, I'm talking about in general. Nowadays, a review will absolutely crush a game if the story is far too bland to engage anyone.