They're not mutually exclusive, of course. Some of the best games ever made achieved both: Super Mario Bros. 3, Super Metroid, SoulCalibur, Half-Life 2, Resident Evil 4. The problem, I think, is that some folks see flashy graphics and think, "oh that studio tried." The same folks see a low-res game and think, "such lazy developers, not worth my time." That's not how it works. In fact sometimes high-powered graphics are used to compensate, to help sell games that are mechanically poor.
Another thing that drives me up the wall is the hypocrisy that surrounds this whole subject. PS2 owners were fine with inferior-looking third-party games. They didn't migrate en masse to Xbox 360 when multiplats performed better there. Now suddenly they turn their noses up at 900p?
Nintendo fans since 2006 have argued gameplay over graphics. Then Mario Kart 8 arrives and they're posting .gifs and drooling over textures and water effects.