One of the best things Microsoft ever did for PC gaming was the creation of DirectX. It unified a set of diverse and tricksy APIs into one package that gamers could download to make sure games worked on their hardware, so long as it was fast enough.
DirectX 11 will be shipping with Windows 7, and promises to add "tessellation" technology that should allow developers to create more organic-looking objects.
There's also a "compute shader" that'll let programmers treat the graphics chip like a parallel CPU, and gives better support for multi-cored CPUs.
It'll be some time before AMD's first graphics cards to support DX 11 enter the market, but when they do expect rival Nvidia's cards not to be far behind.