As we knows games are advancing, and some games are building in some core components that seem to be spreading in all games. Heres a list of what I believe the best engine should hold.
Physics
The new fad, almost all the new fps have it and there was talk of the Playstation 3 having software physics inbuilt into the system for developers to utilize. Adds a cool passtime (shooting corspses around) adds some realism (who wouldnt bend over a bar if shot :p)
Water
Getting prettier, and getting more advanced. Only game to really utilize it yet is UT2k3, but that only adds physics to its movement. The next step is actual water reaction so seeping and free movement is possible (supposidly in stalker).
Face Animation and talking
Half Life 2 pulls this off amazingly, the faces squint, roll and move realistically almost making you think your watching a real person talk. Perfect lip sync, drags you right into the game.
Eyes
Once again, Half Life 2, its amazing to watch, the eyes glint and look 100% real, amazing and I think it'll be the next big thing in the coming years along with face animation.
Wind
More of a Zelda:Wind waker thing but Id love to see it integrated into every game. Having realistic wind in every game would be amazing, you couldnt do much but itd be nice to see debree moving in the wind.
Destructable enviroments
Red Faction was abit limited but its heart was in the right place. I dont expect anything like this for a few generations because it would effect plot to much, you could just shortcut a whole level by blowing up walls, but it was really fun in multiplayer crushing people.
AI
Black and White promised it, but it never really delivered. Splinter Cell tried but it wasnt quite realistic and advanced as Id have liked. The next BW promises better AI, hopefully this will be what the gaming industry needs. AI is advancing but not as fast as expected, but its a core part of everygame already, wouldnt hurt to wish itd improve
Lighting
Doom 3 has got it right, but its prooved that the current hardware isnt quite ready for full dynamic lighting. It adds a real immerision factor when you can shoot out a light and everything around you acts realisticly. The scene in the bathroom with the corpse and the light swinging is just amazing still, and it shows how much lighting effects the core.
Realistic weather
Most games offer a watered down version of this with rubbish cycles (zelda wind waker) but I wish they'd do it properly. Being to hot for to long would build up humidity and would bring a storm etc (supposidly in stalker)
Realistic player interaction
No game has this and I want it so bad, theyd need to remove the low poly weapons and make the actual model the users in wrap round the view, so youd have realistic arms and a high poly gun that everyone would see.
This way you could really put the user in the animation. For example falling of a roof you might survive but youd crumple and no doubt drop your weapon and pull yourself up, how cool would it be to have your vision as that happens act realistically. Instead of just falling and landing straight up looking straight on with your gun still in your hands.
Long distance interaction and view
Farcry, big wide lush island that lets you see and shoot for miles, cant wait for all games to integrate it. Imagine a complete Half Life 2 city and just soaring above it, with a bustling city. Or Grand Theft Auto (without the low poly models as you get further away).
Day/Night cycles - NPCS
Doesnt really make much of a diffrence, but it leads to alternate plots (zelda:ww for example) which kind of ties in with NPC's having there own story that you can interact with at diffrent times of the day.
Vehicles
Self-explanitory, UT2k4 will have them all over the place, Stalker, Half Life 2 - etc all include them because theres always something exciting about speeding around in a car knocking enemies over.
Feel free to add.