It is a big part, but it should not be the primary focus. It doesn't matter how pretty a game looks, nothing can make up for bad gameplay. Even Crysis had decent gameplay[footnote]gameplay experiences vary from person to person[/footnote].
It would be nice if right now, we stopped with advancing graphics. Games look well enough, lets give everyone time to make the most of what they have now. They'd be able to learn the tech more, use it more efficiently, get it to run smoother and on more systems, keep costs down due to familiarity and cunning uses of said tech, allow more systems to run the tech, would allow devs to focus on more parts of the game, like story and gameplay, and basically it would be better for everyone.
Look at God of War 2. It shows any system can push out a great-looking game, you just need time to figure out how to use it.
Graphics look good enough now. Lets start focusing on other parts of games that really need attention, like voice acting and story. It would allow devs to have more time with the tech, which would result in it being used more efficiently, which would result in low costs, allow it to run on more systems, which equals more sales. It would be better for everyone. But now I'm just repeating myself, so I'll stop here.