Right now, we're still trying to perfect the visual part of VR. In 5 to 10 years we may get to the point where graphics are no longer indistinguishable from reality as we know it.
Research into providing the sensation of touch has begun already and in, say 25 years as a safe estimate, we may be able to perfect that as well. Games where you can comprehend the texture and weight of every object, wince from every blow you receive, and even feel a cool wind or gusts of heat all over your skin.
In about 50 years we will have the senses of smell and taste covered as well, and by 100 years from now VR may become impossible to tell apart from reality.
But.. people will still KNOW that it's fake, because they will remember being out here in reality.
So what's the next step for achieving maximum immersion?
Voluntarily wiping out your memory of the real world before you log into that next-gen VRMMORPG. Eventually you have people being born into a world without a clue and having to be cared for by and learn from others until they can orient themselves, and all sorts of theories about what happens when they "die."