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"I built Naughty Dog on graphics – Crash looked better than most other games at the time, and that’s what made people look at it."

People are interested in graphics that's what's he's saying.
Wow! what a good lookin game, that must be fun to play. And I think it's pretty often true. Low budget games are being made with older engine's Postal 3 for example on Source engine. Unreal Tournament will look much better. Gears of War is also a good example.

I don't think graphics keeps you playin. After awhile you get used to the stunning graphics. It doesn't mean graphics don't matter anymore. I think many won't play there last gen, when they have a next gen console.