Just a quick update today about the what simulation games might (or hopefully) look like in the future.
I ran across the above video at YouTube showing the engine of EA's new game Crysis. More searching lead me to walkthrough of the CryENGINE 2 game engine.
Even though Crysis is a single player shooter game the engine makes me think of the implications for the sim gaming genre such as laying transportation networks, creating and forming terrain, breaking away from the grid and controlling weather. Not to mention increased flexibility with the viewpoint. Here's some demo videos in an urban environment:
Other Simming games are breaking away from the isometric view such as Tycoon City: New York, the Sims 2 and City Life. Though, finding a balance between system requirements and stunning graphics would be a challenge.
Monte Cristo is currently developing Cities Unlimited which may raise the bar in city building simulation games.