@ Kasz216: I wasn't a big fan of Vagrant Story either; I was just using it to illustrate the fact that increased processing power means more than better graphics and sound.
As for Oblivion, things like story and characterization transcend hardware power, true, but aside from Earthbound, all of the games you mentioned are sort of one-dimensional in that regard anyway. If you want to look at games that were really well written, you need to look beyond the SNES generation. (Fallout: 1997; Planescape Torment: 2000; KotOR 2: 2004; Portal: 2007, just to name a few.)
And that brings me to another point: Games have steadily increased in production values as time goes on, meaning that developers can afford to do things like hire real writers (or translators, in the case of foreign-developed games). That's why you'll very seldom find a well-written game before the "Fallout generation" of RPGs.
@ El Duderino: All other things being equal, do I think a game with better graphics and sound is better than one with inferior graphics and sound? Hell yes, and you'll have a hard time finding someone who would say otherwise. Do you think that they're somehow equal, or that the less pretty one is somehow superior?
"'Casual games' are something the 'Game Industry' invented to explain away the Wii success instead of actually listening or looking at what Nintendo did. There is no 'casual strategy' from Nintendo. 'Accessible strategy', yes, but ‘casual gamers’ is just the 'Game Industry''s polite way of saying what they feel: 'retarded gamers'."
-Sean Malstrom
