Here's thething, physics is important in just about everything that is meant for entertainment.
From animation to gameplay to movies. Good examples:
Animation:
Although Disney has some of the highest quality animated cells out there (Pocahantas, Lilo and Stitch, Beauty and the Beast) its physics is DEPLORABLE! Some of their series such as Gargoyles had some excelent still frames and character animations, but the guys looked like they werehanging on strings when they flew.
OTOH, you go for something liek Batman or Samurai Champloo, and you get some incredible physics, albeit stylized, than make you feel when someone gets hit or a table gets knocked over.
Movies:
One of the WORST thngs I see in movies is ignorance of action-reaction. Movies like the hulk stank because of little things like giant metal balls that bounced off thin steel railings and the fact that the hulk did not leave craters whenever he jumped (he did when he landed, but what about the force needed to get him in the air?). A lot of people do not notice these things, but you get more of a realistic feel to a punch when it is done right.
Movies like Bulletproof Monk and, god forbid, True Lies ignored physics so much it was horrible. You never got the feeling that you were watching through a window to a fantastic story, but that you were watching a movie.
Games:
Here's the biggun.
Things I liked in FEAR that made it more enjoyable were little things like lights that could sway on cords when you hit them. Ragdoll physics for teh bodies, and objects that could be manipulated.
But as much as I like that, there are still som many gaps.
Examples:
-Graphic plants that do nt really move when yuo go through them, and offer no cover when you are behind them (see Oblivion).
-Chainlink fences that can stop a bullet, or rocket from going through them.
-Wooden doors that are somehow impossible to break.
-Explosions that only effect some items in the area (why don't windows shatter all the way down the block? And what about the concusion wave?)
-Vehicles that have little spin, or impact when driving on games and hitting things. The worst are vehicles in FPS's.
-The inability to USE things in the environment, like chairs, boxes, lamps. Or to build actual things like tunnels and ramps that would be subject to realistic damage from attacks, not just pre-programed scripts and damage levels.
-Sports games where a stiff arm can send a defender down, gut a well placed hit can send a guy spinning rather than sticking magically to the defenders arm and going down in a heap.
Me? Things I would like to see? Environmental interaction. I would liek to be able to blow up buildings by taking out the supports and not having to hammer it until its HP's are gone.
I want boxes i can smash open without magically making it all splinter and dissapear, but also possibly damaging what is inside.
I want life.
Now can this new chip do it? Probably not. Finite elements and time sequence loading takes a while to do even on simple models, to do it 60 times a second would be difficult to say the least. But if they are starting,I am all for it.