Like most things I have mixed opinions.
I think graphics have gotten up to the point where artwork looks like artwork. It's been like that since the last gaming generation. While there is definatly a differance between say PS-2 era games and high end PS-3/360 era games for example, the differance isn't as extreme as it has been in the past. Plenty of people play older games, especially today, and series like "Silent Hill" have substantial cults of rabid fans behind them. For all of the mocking, games like "Deadly Premonition" can put together a pretty solid cult of fans as well by having good writing, and a fun enviroment.
This is to say nothing of games with a truely minimalist approach like ASCII RPGs like various "Roguelikes" and of course "N" and "N+". Things like Nethack are still played heavily and in circulation, and people periodically create new versions. Then you also look at games like "I Made a Game With Zombies In It" which seems to be the consistantly most downloaded and highly rated indie game on X-Box Live.
The point being that I think a consistant art direction is what is most important to a game nowadays than the best overall graphics quality and so on.
The reason why I think graphics are made such a big deal of is simply the fact that reviewers are pretty much the slaves of the gaming industry. Not just developers, but also hardware manufacturers (albiet to a lesser extent). Simply put developers being by their nature tech geeks want to play around with whatever the highest end stuff out there is, heck they are getting their hardware and such on the dime of the producers with rare exceptions.
Pimping the latest in "uber graphics tech" plays to the interests of the devs, as well as helps keep a certain path of development rolling forward. I mean if the attitude is that the new tech in the newest console is extraneous to making a good game with solid gameplay, it's not going to convince people to upgrade to the next gen. What's more given the general lack of experimentation/creativity in the industry, what else do you say to sell the latest shooter that plays exactly like every other shooter from the last two generations of technology? You sell the fact that it looks slightly prettier "oh yeah, look at how the smoke from that explosion curls, and how well we can now texture a rock".
This kind of hype of course leads people to buy new hardware to support the newst games, and people who dish out that money of course are going to parrot the arguements made to justify their purchuse. Typically however the developments take place in such tiny micro-steps that they are irrelevent to most game play. As some people have pointed out "Alpha Protocol" has decent graphics, even if you don't like it's choice of art direction. Sure, someone can point out games with better texturing or whatever, but those differances are minimal and are only going to matter to someone caught up in tech-hype, or with a serious eye for graphic art... or simply put it doesn't matter to most gamers who are focused on sneaking around and shooting people in the head. Does the door look like a door? does the rock look like a rock? Does it fit in with the rest of the setting? does the setting look fairly good, and like what it's supposed to be? If the answer to those things is "yes" to the player then the graphics are decent. Someone going "OMG, when I stop and look at the textures of this grass closely it seems a bit off" is not your core gamer who is not going to be stopping to examine the bloody grass in minute detail.
Don't get me wrong, I'm not saying that such things don't matter at all, it's just that they don't matter that much beyond a certain point. I'm not saying it's fine for most current games to say use pixelated 32 bit sprites or whatever.
I'll also go so far to say is that I feel that this is also related to the proliferation of certain kinds of games for business reasons. Things like "turn based games" are picked on by the gaming media, which of course influances the user base, especially those from the mainstream just coming in. The gaming media very much tells people what games should be. It is however notworthy that the kinds of games being lionized to the mainstream are also the easiest kinds (relatively) to produce. Putting together a relatively slow moving RPG or strategy game with a consistant set of mechanics that can be managed by the player is harder than coming up with a "shoot them in the face" action game, which is probably just going to be a tweak on existing third person or first person action games that already have existing engines. Creating a new gameplay engine (which is usually required for RPGs and turn based games) is arguably the most difficult part.
To some extent getting people to look at the pretty graphics helps detract from the lack of actual game design going on at the core.
Such are my opinions.
Keep in mind also that I am also pretty well influanced by current events where we had Squae-Enix claiming that somehow with current, more advanced technology, it has rendered it impossible to create a game equivilent to something they turned out many years ago (Final Fantasy VII). I don't entirely believe their claims, but if it WAS true consider that this would mean in a very literal sense that the current graphics technology has actually regressed gaming because the industry cannot build on what it has done before and actually move forward on a basic level.