First off, graphics do not make a game. Anyone who has played Borderlands, and is into the type of game it is, knows how amazing of a game it is and the whole game is cell shading, it's cartoony and not at all realistic, but the game is amazing.
Now that's off my chest I have to say graphics aren't going to get much better this generation of gaming due to hardware limitations on just maintaining those graphics over the full course of gameplay. That said we will get more and more realistic as we go graphics wise, depending on the game and genre. Graphics are rather difficult to make and we can't, as you said, just take photos and use those. They would just look far to choppy and look even more fake. It has been tried.
Now as for when we will get the interactive movie feel? Either when we can beam the game into your brain and play it within your own mind, or when we have the hardware to process it full time without your system physically melting, game developers have 10 years to work on each game for graphics alone, and when we have the hardware to render the, fast enough. Graphics are the exact reason you need a TB or more hard drive these days. All of the programming for Skyrim is the smallest part of the game size wise, 95% is graphics. So to run life like graphics we need unreal amounts of hard drive space, RAM, and processing power. So to answer your question, not for a while.
Games will become truly life like in this order:
- Physics Engines
- Audio
- Graphics
But the way things are going now I think the gaming world is going more for those cartoony but smooth type graphics. People want gameplay more than graphics recently so you might need to wait a bit for the push for graphics to return. They will always be increasing, but in my opinion the rapid advancement in graphics is going to slow down for a bit.
