Even at 3.5GB shared over the system, that's considerably more than what the PS3 has and should allow developers to breathe a lot more than they have before on console games.
I'm expecting faster loading now, and higher quality textures. Hopefully the 500MB system reserved memory is enough to let us multitask like we wanted to do on the PS3 but never really got it due to RAM limitations (Think in-game XMB limitations and how long it took to even get it).
PC games are only going to look better on a high end gaming PC, not just your average PC. That means a PC costing at least $1,000 compared to a console that will cost around $500. People don't want to spend insane amounts of money on a closed system that can't be upgraded which will be overshadowed by the next generation system about 7 years later. The PS3 launch was evidence of that with it's $600 price tag.
Now I'm all for better hardware specs, but I don't think people are willing to pay enough to get what you are looking for in a console. People with money build a gaming PC, people with a lower upfront budget will probably be happy with a console. There are two different niches there, and it wouldn't really make sense for consoles to try to be a direct competitor to PC since PC would obviously win due to the nature of how consoles are (closed system, no upgrade path).
If you really want that premium experience, you're going to have to buy premium PC parts and build your own PC, and be willing to shell out a greater amount of upfront money (assuming you don't already own a gaming machine to upgrade just certain parts).
With all that said, just the fact the memory is unified and much larger than before should be heaven for developers coming from the PS3.