This is a difficult subject with many opinions of both sides. Personally, graphics are not important to my enjoyment of a video game, merely because I look for longevity, a good story and of course genre specifics.
However, with games now coming to the attention of the mainstream, the label of "art" around videogames is sparking discussions. Many assume that art has to look nice, to be Aesthetically pleasing, which you could argue is true. However, art is also about emotion, how it plays with you, what it does to you, not just how it looks. Of course, with the broadening of the industry to casual gamers, graphics have become perhaps less of an issue, as these gamers want a quick thrill or burst of enjoyment, regardless of what it looks like. On the reverse, hardcore gamers who play action games or bigger RPGs love to see an explosion of colour or a brilliantly rendered city, it is, intrinsically, pleasing to us.
On the whole, as long as you are not simply a "graphics whore" AKA someone who JUST looks at graphics, games should aim to be as graphically pleasing as possible BUT they should never do this at the expense of other, more important areas of game creation, for example the storytelling or gameplay itself.
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