There's a long list of genre authors who are writing or have written great stories and great prose: Patricia McKillip, Lois McMaster Bujold, Rex Stout, Iain M. Banks, John Varley, and Samuel R Delany, to name a smattering. Toss Annie Proulx from the train.
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B.R. Myers has an article in The Atlantic Monthly which he subtitles an attack on the growing pretentiousness of American literary prose . A friend of mine said, and I concur, that this guy is explaining to us stuff we didn't know we were thinking. I can't count the number of mordern "literary" novels I've failed to complete because of sheer tedium -- and I love the 'classics'. I just re-read Gatsby with pleasure. And I've never been able to finish Cormac McCarthy.