So far everything shown indicates vspectra is correct (baked shadows and lighting for the world, dynamic shadows for the cars; some sort of HDR technique other than FP16). If there were dynamic lights and shadows you could have time of day change. I don't know how from the videos someone could argue there is dynamic lights/shadows because you don't see the sun move. HDR effects are compatible with baked lighting. The only thing dynamic is pretty much the cars and some props (as should be really). And as vspector noted, the shadowing on the world geometry, for example, looks like traditional prebaked. From a practical standpoint imagine trying to do dynamic lights on the grand stands with 100,000 seats ... yeah. Baked shadows and lighting is cheaper, faster, and better looking. And if your geometry is pretty stable there is no reason to do dynamic lights and shadows for static objects unless you really, really want time of day change.

But there is always a potential for compromises (e.g. a number of games can do their precomputed lights and shadows within a number of seconds/minutes, so they could do "dynamic" time of day changes while maintaining a baked general solution, but that would eat up memory footprint.

Btw, I have seen very little realtime gameplay in 720, but can anyone note road texture quality (i.e. are they applying some filtering this go around?)

I don't see what the big deal is.. especially considering they say that you can install the data from the second disc. There was a day when games came on multiple CD's (console games, even).. and no one complained.

at that comparison shot Lebato posted...what's the graphics opinion on this? I've not paid attention but that's quite dramatic to me...It's great ammunition for those biased in the sufficient direction. The same people will forget of course that if GT:5 requires a PS3 install that's effectively the same thing :/

I think it does show that DVD is starting to show it's limitations and there are legitimate reasons where more space maybe required. That's not to say 360 owners are losing out in any way though.