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It depends on the game.

Many games such as New Super Mario Bros., Super Mario Galaxy, Super Smash Bros., F-Zero, Mario Kart and Pokémon don't need realistic graphics to be great. Fun gameplay and level design is what makes those game classic. Other games such as Metroid Prime, Dead Space and Skyrim rely on realistic looking environments to create a more immersive experience. (Which is why Metroid Prime 3 felt horribly outdated to me.) And then there are the hybrids like Halo, Call of Duty and The Legend of Zelda which kind of rely on it, but it isn't essential.

Or at least that's my view.