The "graphics at the expense of gameplay" dichotomy, is false for the most part. Visual presentation and gameplay mechanics design are two different jobs done by different people actually. It could make sense for low budget games with limited amount of staff, but in that case, what cutting edge graphics technology could you afford?
Every former fan of the Final Fantasy series knows this dichotomy is real. Final Fantasy games used to be excellent all around: graphics, gameplay, music, world building, story, etc... Then Final Fantasy 13 released. Visually it's one of the most impressive games on the PS3, and the music is excellent too. Gameplay, world building and story are all noticeably lacking compared to earlier Final Fantasy titles. They didn't even have towns. That is a severe cutback.
Budgets are limited. Companies choose how many to hire for each job to work on their games. Currently for AAA games it is common for artists and animators to take more of the games budget than all the rest of the staff combined. It did not used to be this way.