Most games have a long way to go, true. But Western developers have made tremendous progress this generation.
Just look at how dialog is handled in games like Mass Effect, LA Noire, or Deus Ex. I mean, last gen we were lucky to even have voice acting. Nowdays you get sophisticated camera pans, facial motion capturing, and dialog options that really require you to think about how you want to respond in a dynamic interactive way.
And we have storyarcs like the one in Red Dead Redemption with that amazing denouement and Bioshock's great narrative twist or The Witcher 2's branching narrative paths.
You are greatly reducing the level of sophistication we have advanced to in just one generation to reduce to "interactive dialogue/sleep with people."
I understand that people may like Japanese aesthetics or whatever, but really, can you name a single Japanese game this generation that you think has a story that doesn't reduce itself to parody by the end? I mean, true we have dumb shit like Gears of War and Call of Duty, but we also have the types of games I just mentioned.