It'll be 2 console generations [depending how long this one lasts] at least before anything as remotely complicated as this is included in gaming.A comparrison would be like getting realistic cloth physics out of the N64, sure it might be technically capable to it, but you would not think it was realistic. Sure if the screen was entirely dedicated to it it could, but not in an actual game environment. The soonest you'll see anything appear like this will be on PC. They might be able to pull it off sooner as they can continually upgrade. Regardless though, the future looks good for particle physics.

I don't think it will be that long, as the current systems are no where near their operational limits. But the primary reason that it's being held back is because of the nature of particle physics en masse. Physics states that when object a collides with object b in a particular way, then it will react in a particular way all the time. The problem is when you have several million objects colliding. Visually stunning, but if you rely on it as a game mechanic, it won't come out the way you want. For example, dropping a cloth on a persons head. That cloth can be affected by tons of variables the second it leaves your hands , most of which can screw up the desired results. If it's a critical part of the gameplay, it can frustrate the player to no end. (It's actually why I hate physics based flash games, you can do the exact same thing a thousand times and it may work once, simply because the physics like to throw in a random characteristic that's out of your control)