Finally! Say goodbye to the cartoony graphics and crappy-looking NPCs. Rockstar's RAGE engine looks stunning to say the least. Of course, it doesn't compare much to other engines like Unreal Engine 3 or CryENGINE 2, but considering the draw distance and amount of pixels the hardware has to push out, it's damn impressive to say the least. I'm very excited.
Rockstar did confirm that Grand Theft Auto IV will be running on their RAGE engine (or Rockstar Advanced Game Engine). The debut trailer just released a day ago was using that engine in real-time, but no confirmation on which system it was running on (PS3/Xbox 360).