From a console-selling standpoint, having the best graphics has usually meant that you don't win the generation, ironically.
3rd generation: NES outsells graphically superior Sega Master System
4th generation: SNES outsells graphically inferior Sega Genesis (though it had faster processing speed)
5th generation: PS1 outsells graphically superior N64
6th generation: PS2 outsells graphically superior Xbox
7th generation: Wii is outselling graphically superior PS3/Xbox 360
Better graphics are 1 for 4 in the past four generations, soon to be 1 for 5.
The common factor among "winning" CONSOLES is superior game libraries, not graphics. However, when it comes to individual GAMES, I think really does depend on what faction of gamer you are trying to sell them to, so there's not a definite answer there.
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