As far as looks go
to play: it doesn't matter
But to PAY: if DOES matter.
Look, games like films are art, it is the substance not the quality that matters.
However quality standards are linked with both price of hardware, effort to create them and value.
So I am not going to pay a full £40 / $60 for a game that has just come out which looks like it came out 6 or 7 years ago, otherwise I might as well buy a game FROM 6 or 7 years ago and pay the correspondingly lower price relevant to how much game depreciate in value as games quality standards improve at such a rapid pace.
Same with some simple (but new) 2D game that has just come out Like Mega man 10, no way am I going to pay $60 / £40 for a game like that, even though I may end up enjoying it more than a $60 game the "eye candy" is not there.
Small caveat with a Console-PC comparison; The cost of making the console hardware is subsidised by the final price of the games that go on it, while on PC the expense spent on your PC hardware is quite detached from the cprice of games.
Yet still I expect high graphical quality from PC games considering the amount that I may have spent on my gaming rig.
So bottom line:
If I pay £20-30 for a game I expect great graphical quality (not necessarily realistic).
But if I pay £2-10 I will settle for much lower graphical quality, I.e. some 16-bit re-make/re-release
But I will only play it if it is good, regardless of the cost. My time is worth more than money.
I expend this to films, a Blu-ray version of a film has almost the same content as a DVD version, I am (maybe) willing to pay more for the blu-ray due to the better quality. This is one reason why I won't pay for films on PSN/XBL films network as the quality difference from DVD is as great as the quality difference between blu-ray and DVD... yet they charge as much as for a DVD.
nah, something with a low bitrate like that should be VERY cheap, like £1 per film (especially considering it is only a rental) for that quality. That is why I am drawn to things like Hulu that stream relatively low quality (around SDTV quality) and the "price" is quite low, low enough to be supported by ads alone or a very low monthly fee.
I suppose BBC iPlayer is equivalent, assuming you need a TV licence to use the service (£140 per year, £12 per month, $18 per month) you get a LOT of content at less than DVD quality, kind of like youtube quality.