Re: PhysX officially sucks.
The baseline hardware is what decides if games get GPU accelerated physics or not. We can't get good games built on hardware accelerated physics when there is no user base to buy them.
I predict that the next generation of consoles, how far away they might be or not, is a breakpoint for GPU accelerated physics integrated into gameplay. Because they function as lowest common denominator for games, where you can build games and use the GPU/CPU however you want.
Of course they will have to balance the GPU physics load versus graphics. A game built on really advanced physics creates immersion, and if that is higher than top end graphics tweaking, I say that it is worth the loss of potential graphics power.
Ps. PhysX support is being worked into SpeedTree 5.0 for future games using it (quite a lot of games do use SpeedTree).
Ps2. Also remember it was not that long since NVidia bought Ageia and PhysX. I would guess that the GT300 is the first GPU which would be really designed for GPGPU and physics acceleration. If you think current effects suck, just wait and see what they will do in the future. I think it has great potential.
Ps3. (I wish I had one) The software for integrating physics (PhysX) into games is also getting better, with the APEX tool for example. So NVidia is working on development parts too.