Xenoblade OST pretty much made me forget about the characters.

That soundtrack is amazing.

I think it depends on the game - there was so many FPS games I turned music completely off, and they were still great games to play.

On the other hand, there are games that gained so much with great soundtrack, to the point of becoming crucial part of making the overall feel of that world - Fallout 1/2 being prime example of this, with average graphics compared to its contemporaries, but with one of the best (if not the best) atmospheric soundtracks in industry so far.

While I do love retro-graphics I rarely go back to a game just to enjoy the visuals. A good soundtrack, however, will pull me back in again and again

I agree.

My example is KotOR. Graphics are pretty bad by today's standards, but the soundtrack has some very powerful themes that never cease to evoke emotion in me. KotOR II is much the same. I associate specific emotions with the various themes, and those themes make both games so much more enjoyable. (For example, the Ahto City theme. On my first playthrough I visited Manaan last, and so this was after Bastila had been kidnapped. I always feel sad when I hear this, but I love the theme to death because it reminds me of just how incredible it was to play through the game the first time... and many times after that.)

Journey is another excellent example of how music can add to a game. It would not be anywhere near as good were it not for the music. Warhawk has fantastic music, but it was sadly rarely used because the game was online only. I'd end up sitting on the menu screen just to hear the whole song play.  inFamous has a few particularly powerful themes that made their respective scenes much more intense. (Genesis, The Truth, Pleasant Empire.)

There are plenty of games I remember fondly mostly because of the music and sound design

Journey
Closure
Machinarium
Fez
Pixeljunk Eden, Shooter, Sidescroller, 4AM (ok last one doesn't even have gameplay)
Space invaders infinity gene
Shatter
LBP
Terraria

There was no point in replaying Machinarium or Fez for the gameplay, did it anyway for the sound.

Kind of a theme here, I can't remember the music of most AAA games :/
Uncharted 3, Halo 4, Dishonered, AC3, FC3, can't remember a single theme or song... I can only remember they all had pretty good sound, yet easily forgettable.

The opposite for me, good music really stands out for me in game and I more often than not remember games from their music.

I fully agree about the importance of music in gaming, or in any audiovisual medium for that matter. It's definitely a key element to set the mood of the game, highlight its events, or convey whatever message or emotion you want to communicate. It's one of the things that makes a game unforgettable to me instead of just good.

As you mentioned, Mega Man X is a great example of this. Even with its rather simple story and character development, the game manages to get you into its universe and events in big part because of its memorable music. It's how the game motivates you to overcome its obstacles. For example, the moment when Zero shows up to save X at the end of the opening stage against Vile and how X talks about his shortcomings wouldn't be as significant as it is to me with another OST. I can't think about that moment without these two wonderful themes coming back to me:

http://www.youtube.com/watch?v=TdAVDNYhJuk

http://www.youtube.com/watch?v=U3jhUQHGpuQ

I should also note here that I'm a weird case when it comes to music, as most of what I listen to comes from either videogames or anime...

Now, as far as graphics goes, I've never cared much about the technical side of it, but the "artistic" or "creative" side is quite important to me. Just like how I can't think of Chrono Trigger, Mega Man X or Street Fighter II without its music coming to mind, I can't forget about their wonderful art and pixel work either. Or the visual design of Ocarina of Time, even with its now dated 3D graphics. Or the beautiful anime-esque cutscenes that Tecmo managed to craft on that old 8-bit console, like this one:

http://www.youtube.com/watch?v=xN_r51d-oL0 (still one of the best openings in gaming to me, as well as one of the best endings... "Tecmo Theatre" indeed...)

If your comparison includes this facet of graphics and is not just refering to the technical side, I can't really say which one is more important... Both of them are vital aspects to me, regardless of whether you're trying to tell a story or not. However, I do agree that music is somewhat "underrated" compared to graphics these days... This is most evident to me when some people talk about how they regularly play games without music or with a custom soundtrack option, or how publishers invest money into getting some random popular music into the game instead of creating a soundtrack for it... But well, to each his own...

On a related note, all this is one of the reasons why I care little about what David Cage says on the matter. While technological advances do give us more and better tools to communicate our ideas, it doesn't make said concepts better by itself. Just like with movies or music, the core of the medium lies on the imagination and skill of its creators. The human talent behind it all. And when it comes to gaming, many developers have managed to evoke all sorts of emotions from me ever since I started playing games in the NES era, without the need of realistic graphics, HD resolution or 7.1 surround sound.

But I digress...

I value music way more than graphics.

Example: I would still play Chrono Trigger, regardless of its graphics being only 16 bit.

Chrono Trigger has some of the best music in video gaming in my opinion.

It's great to read about your passion for music :)

But I think I would actually place it last, after game design, play control, and graphics.

Some video game music is beautiful, and really helps game makers express the emotion of the event. But it's dispensable, at least in my opinion.

I agree. Music contributes like 80% to the mood. Example:

http://www.youtube.com/watch?v=HwdePF3y9EE