Games focusing in and around urban-esque environments such as Half-Life or Ghost Recon would look better with the washed out (i.e. stale) look, other games such as Fable or White Knight Story may look more appealing with brighter colours. In both instances it is all about the atmosphere the developers are trying to create.
The washed out rendering of RSX was first seen and simultaneously made infamous with the Ridge Racer 6/7 comparisons,
The most obvious example of RSX' washed out rendering that also happens to be the most spectacular display of what will probably become the main graphical difference between the Xbox 360 and Playstation 3 is present in Armored Core 4. The game is a clear example of how personal preference will divide peoples opinions on which version looks better.
These screenshots were taken from the GameTrailers HD Comparison Video of Armored Core 4,