I can't believe we're even having this discussion. This was relevant in 1998 when the PS1 and the N64 were having it out, but today? I guess people are going to be debating this one 'til the cows come home...
What amuses me a lot is how most of the examples people come up with of games with good gameplay but lax graphics are still games that, at the time they were released, were peak graphical achievements and represented some of the best of what people could do with the technology at the time. I'm also amused that NONE of the examples are from the Atari, which had graphics so bad that you couldn't tell what one object on the screen was without reading the manual. Even the examples you could come up with for the Atari are games that had the best and most sensible graphics the Atari could offer because you could actually tell what you were playing.
Meanwhile people keep panning Crysis as if it's positively unplayable junk--well, maybe I'm speaking too soon, seeing as a lot of it is pretty poorly programmed, but it's certainly no Lair. Still, there is a valid argument wrapped up in all this contrived nonsense. There ARE games, like Crysis, that focus exclusively on technology--not graphics, graphics aren't the enemy here--but technology. The worst offender I can think of in recent memory is The Force Unleashed, where the developers spent so much time getting three different middleware physics engines to work together in the same game that nobody really paid attention to the game; what's more, only one of these three was necessary; the one that makes the Stormtroopers grab onto things when you pick them up could have been left out and the one that makes materials respond like realistic materials could've been so easily faked. This doesn't happen all THAT often, though; maybe there's four or five games being developed at any given time where developers REALLY were putting more effort into a physics engine and the game was just an excuse to showcase it. More often than not developers and publishers are just as clumsy as they are stupid.
One last thing: The Wii was supposed to be the champion of this argument, but I have yet to see the Wii mentioned here, let alone a title compelling enough to make me think that graphics are the enemy of gamekind.