capri, have you seen some screen shots of doom3 (coming out beginning of next year)? That's pretty damn close to toy story graphics already.
There's lots of places where we need more processing power. Graphics companies could use them to create better special effects quicker and cheaply. I like to do some video editing/encoding and rendering graphics as well, it'd be great to be able to do that in real time, or even faster than real time.
Games is where i'm most forward looking to it though, better physics engines that actually mimic real physics, having surroundings that are realistically affected by what you do, and better AI. I can't wait.
Here is a good article about where the future of computing is going. This guy knows what he's talking about.