Realistic 3d envs? Check. Physics? Check. Real A.I.? Chhhh...nope.
New York Times article talks about the current state of computer AI and how it hoping to bring the "freedom" in games and yet feel like we are in "movies". This "Façade" purports to be a story invented through AI interaction.

It is curious though.

Storywise, we haven't yet (AFAIK) seen a good computer-generated linear-path movie script and yet, we are hoping that computer-generated multi-path "doll-house" stories will be compelling (ie. "Façade").

Maybe gamers have less discriminating tastes.

Maybe it is hoped that a bajillion stories can be generated and one of them might be worthy. (Y'know infinite monkeys, infinite typewriters, infinite smell...)