I agree, and another problem I have with better graphics is that developers inevitably use them to try to achieve photo-realism. This means we get stuck with bland, uninspired art where, in fantasy games anyway, everything looks like an Oblivion clone. The in-game characters look like second-rate actors from b-movies and monsters are unimpressive to say the least. It looks particularly ridiculous when you've got realistic looking characters performing cartoonishly unrealistic actions.
Some people don't like the cartoony look of WoW, but I can appreciate it for it's style and personality. It's colorful and fun. There are certainly other styles which take a more serious tone, but far too often developers go for "gritty" realism.