oh my gosh. what is going on here? Graphics get money because developers think that if they make the game pretty for the screen shots (and the rest of the game) then players will not notice that the number of mechanics, and features is lacking (yes they are 2 different things any 1st year game design student, or novice game tester can tell you that).
and the argument that the game engine determines the amount of graphical quality. I have been working with game engines like Unity, Unreal, and so on for a few years now, and would like to ask the question "where is this button that makes my graphics better I keep looking for it and can't find it anywhere?" oh wait it doesn't exist the quality of graphics is based on the system that is running it (partly), and on the artist that is rendering, modeling, skinning, rigging, animating, placing the object into the game.
the reason art (interchangeable with graphics) gets so much money in a game is 2 fold. 1st its because developers are given tech specs for a system (this counts for PC to), and get all gitty like a kid who just got a new toy, and wants to see everything it can do. this leads to such a focus on art (because that's all they think all the processing power is good for) that whenever the subject of new features comes up that is just pushed to the back burner so it looks cool.
2nd because artists are expensive: that list up a little bit that's not an or list its the step process, and that process gets expensive quick. I will not give a break down here, but Master Chief probably costs a good million (severely low ball estimate for mediocre artists) every time he is redone, and that's not talking about any of the other characters that actually have faces which shoots the price up drastically. So the next time you hear about a games budget think to yourself that 70-80% of that went to various artists, and the rest went to the development of the actual game.
When it comes down to it games don't need realism. because Jim was right when he said the best looking game was Viva Pinata of this gen because for all that money that goes into "realism" while graphics continues to improve (after deep breath) those games will look like shit in less, and less time.
when people say that "the graphics arms race will end" this will only be true when companies like nVidia, and ATI say the words "we have enough money", and the big 3 say the same because tech demos of processor speed get developers thinking, but tech demos of poly count those make developers wet themselves with glee.
the big reason graphics gets the big focus in game development is because it take the least effort on the part of the company, and when it comes down to it its the most easily recognizable.
what I always find funny are those people who complain that "games are to short for the money" here's a fun one go, and look up the amount of space on a disk it takes for just one frame of "hi-def" video, and then think for complex (number of moving points on the object) animations that can actually be more. so if a game has alot of hi-detail-complex animations, and even an hour of video (opening, cut-scenes, ending, loading cinematics) you can quickly figure out why your game is only 8 hours on a DVD, or even a BlueRay