I have looked into the history of special effects and how far it has come in order to establish ground on which to build an argument about its affect on narrative.
For starters i looked at the start of mainstream special effects, when it all really got going. As my one of my focus films Sat Wars: A New Hope used special effects in a way that brought to light what you could achieve using special effects, and the new heights of stories you could tell because of it and the realism possible. With George Lucas founding his own special effects company to do the films (industrial light and magic). Using special effects they managed to achieve epic space battle sequences and creations such as the death star.
Following on from this Blade runner achieved alot through special affects as it showed a dystopian earth in the future, complete with flying cars. The spinners in the rain shots showed how special effects was able to be used to create a fuly emmersive shot of flying over a smog filled city complete with other 'spinners'. It was all achieved using superimposed images and miniatures.
Even with the (highly) questionable quality of the narratives in modern films such as transformers it is impossible to deny that they did not push the boundaries for modern special effects. For example some of the most complex animations ever acheived were done for transformers, in total 60,217 vehicle parts and over 12.5 million polygons were animated to bring the 14 robots in the film to life, with Optimus Prime consisting of 10.108 different parts. ILM (indutrial light and magic) were responsible for 1/3 of the total special effects shots in the movie.
(Info from http://www.filmsite.org/visualeffects.html)
I have also found an interesting top 50 movie special effects shots ranking. This list ranges from the old very first films to utilise special effects to the brand new hollywood blockbusters. This list includes revolutionary sequences which would have pushed the boundary of special effects in their time.
http://www.denofgeek.com/movies/177951/top_50_movie_special_effects_shots.html
This glimpse into special effects shows how it has enabled cinema to go further and achieve films with alot more epic scope. I cannot fail but to see that as the timeline progresses that films seem to get more dependant on special effects and story telling takes a back seat instead of special effects being a device used to tell the story. The use of special effects is now practically indespensible to hollywood blockbusters, and perhaps narrative will take a backseat.