Holding it back? Last time I checked, at best, the only thing that might be getting held back, is the Console. PC developers are MORE than welcome to design games that actually use PC system's potential, but they don't.
And if games were being held back, why is it that a game released at the beginning of a console cycle(Let's say, Oni, for PS2) has NOTHING in the way of graphics, compared to a game later in the console's life?(Soul Calibur 3, Tekken 5, Xenosaga, Black, Persona).
The idea that games are being held back by consoles is completely invalid. PC developer's simply don't care about actually pushing the envelope in this regard, besides the devs of Crysis. How many games have been made, solely for the PC, by PC devs? And how many of those games surpass 360 graphics by enough to actually matter to anyone besides the videophiles? And better yet, even though the graphics don't LOOK much better, you're STILL having to upgrade your pc system, to play the newest games!
And let's face it. Halo 3 is pretty much every bit as much fun as Crysis,(unless you're just obsessed with having a keyboard, but that's a different discussion, I think), even though Crysis' graphics are sooo much better. And, quite honestly, the graphics on Crysis aren't that much better than games such as Halo 3, or GoW. I've seen all three, and the honest truth is that while playing the game, you don't usually notice the fact that this tree looks a little more lifelike, or this plant reacts a little differently.