I guess it varies depending how you look at it. While technically graphics means resolution, etc. - i.e. the pure image represented on the screen - I do also consider animation and physics as part of the package.
From the demo I thought the animation was okay but variable. As the detective the animation seemed stiff when merely walking, but great once I was gasping for breath or fighting. The FBI agent's animation felt better when just walking as well as good when climbing, etc.
Anyway, I do think animation counts as well as it can be crucial to how good the visual image comes across. As noted by others the animation in ICO and SOTC remains fantastic even now, with ICO clearly moving like a young, impetuous boy, which not only looks great but really helps sell his character, while Yorda (a young girl) is animated very well as a shy, nervous young woman uncertain of herself in movement.
Try to be reasonable... its easier than you think...