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Kantor said:

Naturally, it's not the most important part of a game, and nobody will ever try to claim that it is.

However, it undoubtedly adds to the experience. It's easier to see things. The little things impress you more. You become more immersed in the world. It's nice to look at, and gaming is a visual experience. Visual design is more important, but good graphics with good visual design is better than bad graphics with good visual design.

I do feel that, now that I am used to slick HD graphics, going back several generations, to the PS1, is a painful experience. Some games can shine through their hideous technical graphics (like Crash); others, like Syphon Filter, fall flat because they are just so hideous (and unpolished and poorly designed, but the graphics contribute). However, go back one gen further to the SNES, and it's all fine again, because it's not trying to look like real life.

If you're going for a 3D, realistic look, you do need to spend a lot on making your game look good. If you make something cel-shaded, or intentionally pixelated, it can look great with far less emphasis on graphical technology.

*reads your 1st sentence* - you'd be very suprised.