This is great news!
This will open the door for physic hardware. Hopefully we soon see a standard physics API (directPhysX?).
before this I was pretty sure we'd see physics hardware die, and game physics advancement climb the same slow path as it has been going, waiting for people to buy more CPU cores, and have more memory bandwidth.
Once you've got a standard API you can then can start having 3rd party companies make dedicated physics hardware (or maybe it'll stay just on the graphics card).
In the end I hope this leads to more complex physics interactions in games, I love that shit.
downside is that hardware might cost more, but I don't really care that much. If I did, I'd be a console guy.
It also make a lot of sense to do physics on the card. You've already got the object polygons in the card memory, so you don't need to eat up more bus bandwidth transferring them again. The question is though, how efficiently you can get the updated object vectors back out of the card.
I'd love to read a white paper about all the technical hurdles they are going to have to deal with.