well, difference in cost could be due to Kinect included into every package... someone has to pay for that and it will allow MS price parity... maybe even MS subsidies more than Sony.
Considering how their plan is to push for cable boxes with 720, every $0.01 matters.
As to what it translates to in terms of graphics, who knows. Microsoft might be able to provide Kinect, and/or lower price with "similar" graphics to possibly more expensive PS4.
On other hand, due to Kinect being standard, their BoM might be the same, and Sony might be able to show the difference in graphics that are easily experienced.
We wont really know until we play the games. Everything else is speculation and a lot of fun.