I've wondered about the little use of background blur, motion blur and soft focus until recent days, because they add a lot realism with little use of CPU.

Great art direction and design mean a lot in realistic games too. Great milestones of combined technical and artistic performance are Gears of War and Resident Evil 4. The freaky enemies, mood-setting lighting, beautiful level design etc. etc. add a lot to the mood. One of the freakiest battles I've had was the one against the steel-clawed blind dude in the dirty torch-lit dungeon in Resident Evil 4.

The experience beats every horror film scene I have ever seen and it has a lot to do with graphics and animation. The Wii is capable of running Res4-like epic and realistic games. I haven't bought Wii yet because there are none at the moment though. It's now more of a matter of quantity than quality, that is, Wii isn't capable of handling huge and detailed surroundings AND realistic looks. Res4 has one of the best balances I have seen. Metroid Prime 3 might look better than Res4.

Because art direction means so much these days, people are not going to buy PS4 or Xbox 720 for more advanced harware. They need to offer something else.

Personally, I loved Wind Waker's look (still do) why?

because I look at it, and say "That is exactly as it should look"

I look at a game like Gears of War and think "It looks realistic, but those aliens are a bit too shiny, that movement isn't really realistic..." And yeah it looks really good, but, not perfect.

Wind Waker doesn't seem to be limited. The movement looked perfect. The expressions looked perfect. Twilight princess looked limited, the expressions didn't look that great and a lot of the movement looked off. 

Great graphics, are graphics that work. They need to do what's required of them in the whole context of the game. There's having good graphics...but it need to fit in with the game and work. Also it depends on the game style. FPS's normally need to have realitic graphics...this makes them work. Platforms do not, they need graphics that work with the game style.

Seeing as some people were talking about cell shaded graphics looking good, well here's a great example (on the PSP). Jeanne d'Arc is due out this year on the system and they have incorporated cell shaded characters alongside a full 3d environment. Visually it looks great, it's not realistic, but it works really well.

Actually that's not cel-shading, thats contouring. Cel-shading refers to the style of sharp shadowing and highlighting. Those characters have the normal or 'plastic' shading.

 Yeah, That's one thing that made me mad last gen. I can only think of 2 games that used cell shading decently. We had Zelda WW, and Tales of Symphonia.

Other than that I really cant think of any games with CellShading that looked decent. (If you notice, those were both gamecube) 

u know what makes also great graphics

 edit : CELL

Yes it does belong in another thread, well spotted, but luckily I can edit it.
My pc hates this website, it displays it wrong, lags loading  it and jumps from one thread to anotehr.... I have no idea why!