Good enough graphics are important. Enough to make the game immersive, or at least not eye-stingingly ugly, and in keeping with the machine's tech level (or attempting to go beyond it, even).
However they are not the be-all and end-all. As awesome as a top-notch graphics demo may be, you can't really get much enjoyment out of "playing" it. If you have to drop the quality a bit - and do so gracefully so it doesn't just look like a cack handed attempt at something better - in order to improve the gameplay, then by all means so so.
(uber case in point: Minecraft ... I think I played some things on my old 486 or even atari that looked superficially better, but they didn't have the sheer weight of stuff that was going on behind the scenes - to do even half of it they'd have had to drop down to low-animation 2D, such as in Civilisation)
tl;dr so long as it "looks good" in its own context, but not everything has to be a DX11 miracle. And design can be as important as the actual technical power.
(Would I be forgiven for preferring FF6's style and graphics over FF7, or even FF10?)