From a setting standpoint, I prefer fantasy. But I do enjoy adding some realism into the mix, like in the clothing or architecture, etc. I just don't really like it when it's only realism, like Call of Duty, or Battlefield, or Madden, or Forza. I play for escapism.
That said, I don't think realism and fantasy are mutually exclusive, at least in setting. I think you can have both in a sense. The entirety of the science fiction genre pretty much does this. It doesn't go all out and wacky with it's world and imagery [small](or at least, it's not supposed to |

)[/small]. It explains everything from a logical standpoint.
Take the original Mass Effect as an example. All of the designs for the aliens, the ships, the clothes, the armor, etc, are realistically designed. Sure, you're not really going to see them in reality, but it does look like something that would be developed or seen in the future. They're designed to make sense. Hell, the codex is another great example. It goes and explains all of the science and history of the world it provides.
Now, from a gameplay perspective? Well... I don't think you'll ever get "realism" in a game. Sure, you could die from a few bullets, require to eat, drink, and sleep, like Fallout New Vegas's Hardcore Mode, and aim a gun through "iron sights." But no matter what, you're never gonna be "realistic." You'll always be an avatar in a made up world. You'll never actually be running into the battlefield, actually looking down the sights of a rifle. Until the do some virtual reality crap, then you can never be realistic.
