The overall presentation matters. Sometimes the higher graphical power makes things look far better than it otherwise would - my favorite looking HD game this gen would be Gears of War. The game's art/graphics make it pretty damn immersive, the same effect would be slightly diluted on the Wii.
However, "Graphics" nowadays seem to refer to all the technical effects thrown in a game, something I definitely don't care much about. Games that strive for realism I find to be pretty boring. That actually plays a major factor in why I prefer Japanese games to most western ones. My favorite western devs (e.g. Blizzard) go for a more cartoony look, if not 2D (SC/Diablo). Hell, I loved 2D sprites, it really sucks how 3D has almost replaced it entirely. I want a modern day JRPG done with sprites, FF6 / Chrono Trigger style!
