Photo realism, isn't realistic, as it is. It will take hoofing power to bring realism to us, with the help of vr. I'm fully aware Oculus and alike are going to be brilliantly utilised for many other things than gaming. The windows desktop, maps, film, tours, teaching etc. Yet, as for gaming, it will be able to rip us away from the 21 year hole we've been in. A.I will be developed for this due to games not being the same as before. It'll be more than just shooters that'll change. We're talking almost like the film, Strange Days (james Cameron wrote it) and it's urges and fixes. An emersion that will evolve major rewriting of how we use A.I and how we see it.
If Oculus is to the price they claim upon release, it'll be the price of an reasonable 1080p ips monitor, and as far as other hardware goes, like 4k monitors and cards to compliment them, or a good racing wheel etc, Oculus is setting up to be a better and cheaper buy than most other hardware you'd be investing in.
I agree A.I should be more intelligent, yet I do think graphics and how their used is as important. I also think simulation is becoming increasingly popular as things look better and feel more real. People want to know what it's like to jump off a cliff, drive or fly, run away from the Terminator, chat up a stunner, play Al Pacino in the shadows of a nightclub etc, if the perspective, story, look and feel as real as you can get but without disturbing yourself too much. People will pay to experience what they can't afford, be scared without dying, famous without being known etc
Current gaming is a blip of what's to come in the next 5-10 years!