Graphics can really help a game, but they certainly aren't necessary. Graphics are just another piece of the puzzle that can really make a good game.
I still play sports games from the 90's, I recently played through pokemon again, the old super mario bros. is still fun, and none of them have assassins creed level graphics.
On the other hand, some games do need the graphics, I've also recently played some old fps games on the xbox... honestly I don't know how we played those on split screen. Some indistinct blob off in the distance that seems to be flashing, whether that's a friend or foe was largely and exercise in shooting them and seeing if anyone complains about team-killing.
Whether I enjoy a game or not often comes down to it having one feature that I enjoy, if it has something I like, it can make up for almost any flaw. As long as you can work out what is going on.
To paraphrase Winston Churchill; Although personally I am quite content with the graphics we've had up to this point, I feel we must not stand in the path of improvement.
PS. Churchill was talking about explosives