I forgot to mention this is a year or prototype of the rendering capabilities of the new PS3 engine.
So it may not be a game on it own but more and more games will begin to look like Kara.
The blinking thing is actually a very good point.
Blinking in the game world, I would have liked to see that; I know what you mean it's one of the little things.
But IRL what would be the purpose of the android blinking? For the same reason Humans do? To clean and keep our eyes moist.
Essentially glorified windshield wipers.
In response to the blinking I'd say it has to do with making the android more human-like just enough so the buyer connects more with it.
We can see she can sing a Japanese song on key and with a bit of emotion despite not showing her sentience until later.
It's like, would you rather have Robbie the Robot cleaning your garage or Kara?
More specifically, would you rather have Robbie the Robot as a sexual partner or Kara?
I mean, I don't want to derail the topic on the inappropriate scale, but I'm 99% certain that people would rather engage in sexual activity with an android that blinks and acts human-like than say a metal doll that sort of just lays there and sings some Japanese song...
Even the film A.I. brought this up with Jude Law's character, who was basically a gigolo. He could take on certain entities and characters to whatever appealed to the buyer. His function was to act human-like enough to sell his services but his actual emotional application is limited.
An even rougher example could be the Terminator or even Alien franchise. A non-blinking android wouldn't pass for long in the presence of humans, especially ones fighting for survival, as can be seen with the T-600 models or the early synthetics in the alien mythology. That isn't to say however that Arnold's character, the T-800, wasn't able to pass as human by not blinking, but he did appear very unusual socially in a public setting.
Basically, the point of blinking is just to fit in, as is talking or responding in a human-like way.
On a different note, while it is fascinating to see the PS3's capabilities, unfortunately I don't think we'll actually see characters look more like Kara in terms of graphical achievement. Quantic Dreams seems to to use a particular style, that is, motion capture work to get specifically what they need. While most games do use motion-capture work, I have found that it seems to be less of an emphasis unless movie-scenes are involved. In other words, that's their style.
Then again, I'd also say that I could be completely wrong [I'm willing to bet that I am] and that this new rendering showcase will be the next step, kind of like what we got with Shadow of the Colossus, which was a rendering capability in its own right as almost every major-title that came after it in 2005 and onwards featured motion-blurs, lens flare, and monochrome colors, as is the example with MGS3 and other games.