I can only comment on the 360 as I haven't played the PS3, so considering graphics only:
Gears of War: it may be all brown and grey for the most part, but the level of detail and steady frame-rate (most of the time) are impressive.
Assassin's Creed: just looks simply beautiful, with impressive draw distances but occasional frame-rate drops and tearing.
Dead Rising: for the sheer number of zombies on screen at any one time and also the quality of the characters' faces.
Grand Theft Auto: a controversial one because everyone seems hell bent on saying it has poor graphics for some crazy reason. Yes they are not technically as highly detailed as Gears, or able to populate the world with as many people as Dead Rising, but if you want to show someone the power of this gen's consoles, I'd sit them in front of GTA4 and drive over to Star Junction at night, or across the Broker Bridge as the sun sets, or just stroll down the street remarking at the tiny details.
Tomb Raider Legend: go in to the mansion and just stand on the platform overlooking the pool. The shadows, the sun beaming through the roof, the water.
Lost Planet: some great snow effects and awesome explosions.
One that I almost added to the list but didn't: Mass Effect. It has potential but then decided to have bland planets and locales. There were some stand out moments/places (e.g. the Citadel, or the space battle) but on the whole it was bland, grey environments but without the level of detail of Gears.