Alright, here it is:
What is your favorite graphical effect used this generation?
To start off, I'll say mine is Screen Space Ambient Occlusion. Really gives a lot of weight and grounding to objects you see in game worlds.
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I love to see a game that has a good lighting system. I really don't like the visual style of adding a bloom effect to everything like a lot of games do. I realize Alan Wake isn't even out yet but it is a great example of a great lighting system. Crysis and HL2 also have fantastic lighting as well.
When you get light to absorb or bounce off different surfaces they way they are supposed to I think it adds a lot to the overall visual quality. Shiny skin is the worst thing ever, people don't glow.
A great way devs get skin to look real is by using sub-surface scattering. It mimics the way light particles get reflected and absorbed under the topmost layers of an object or human body. Much better than any mapping (parallax / normal / bump). I'm pretty sure SSS is used in Uncharted, Crysis, and a few others I can't recall at the moment. I'm pretty sure that's the effect that Ted is driving at here. Although the reference to Alan Wake is more regarding dynamic world lighting and dynamic shadows, which play a great part in creating the proper atmosphere for the type of game that Alan Wake is. To this day, I am still befuddled as to why monolith isn't giving FEAR a dynamic shadowing system...doesn't make any sense for a first person horror game to not have one.
I would have said SSAO but since you said it ill say Parralax Occlusion mapping, Takes a 2d Flat Texture and incorporates Occlusion methods to make the texture actually appear 3-D and react to the angle and distace the camera is looking. Kinda Like DX11's Tesselation But with no additional Vertex/Geometry data
I think Perfect Dark used it heavily, And i know Crysis Does :)