well, I wouldnt really say it's good enough, but it's getting there. Here are a few reasons.
1) kawaii culture actually rejects realism in favor of cuteness.
2) Story driven game is more popular in Japan
3) Gameplay more important than graphics
I feel that those 3 reasons are thoroughly accurate in explaining the "why". There are others, like wifi and such but I don't know too much about those.
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I don't think anyone realized they would actually buy games in the first place, and they would be sated with boys games. If we look back to the GC days, when Nintendo was trying to compete graphics wise, they learned that their games really had a good following with women and younger audiences. Seeing as how Nintendo really couldn't keep up with this next-gen graphical ability, they made a GC that was more fundamentally Gamecube, the wii and it blew the doors wide open.
I think Popcaps and other indie companies who have been making these smaller games really found a large female following before anyone else though, around the same time that GC was entering the market, thus introducing the concept of casual gaming with tetris style games and the like.
