To put things into perspective, Oblivion pretty much launched the Xbox 360 console. When it came out, we compared it to Morrowind, which was an Xbox game and had Xbox visuals. So of course, at the time Oblivion came out, it looked amazing. But then Gears of War and Mass Effect came out, and we saw those developers take more advantage of the 360's hardware. I look at Skyrim and I think it looks great. I think many of us think it is mediocre-looking (graphically) because this is what Oblivion should have looked like, or at least had the potential to look like (obviously, since both games were created on the 360).
Now, some further points. I am a console gamer, mainly 360 when it comes to Elder Scrolls games since Morrowind came out, so that is what I am commenting on. Also, the OP said his post relates to playing on the Xbox 360. So PC gamers, we all know that PC's can do spectacular things graphically. The PC hardware is 5 yrs ahead so please, don't get into the same old PC is better than console argument at this time.
Basically, there are two major points to make, I think. 1) There are definitely better games out there (graphically) than Skyrim, but... 2) Skyrim's world is massive. You can basically interact in some way with virtually everything in the game and go to any place you see off in the distance. I don't think there are very many games out there that do this sort of thing. When I compare the character models and artistry from Oblivion to Skyrim, there is no question that visually, Skyrim is a whole lot better. The orc and khajiit screens I saw recently look spectacular compared to Oblivion. That's really what I'm looking at. I'm comparing the next TES game to the previous one and as long as they have made improvements (which they definitely have) I am happy. I don't compare it to other games, because it's like apples and oranges; both are fruits but have different flavours, each of which is tasty in its own right.
Combat-wise, I'm sure we've all read by now that the player character "sticks" to the world a lot better now and that combat will be more visceral and tactical. I'm sure it will be much more satisfying now to finish off your opponent than it was in Oblivion.
I feel that gamesas has done all they can (with the current gen consoles) and I'm pretty happy with the product they're putting forth. Look for TES VI to launch the next gen of consoles, in which it won't take full advantage of the next gen hardware capabilities but will still look amazing when it first comes out and will revolutionize the RPG genre once again only to have us whine when TES VII comes out and doesn't take full advantage of DX 15
Enjoy the game you crazy people! Wait till you vanquish your first dragon. It's going to be EPIC!