The "FFXIII has bad gameplay and design" is highly debatable, and the decisions made in that regard could have been more related to their goal of appealing to the western market than because of budget priorities.
Yes, budgets are limited, the point still stands. A game having great graphics doesn't mean that it has crap gameplay of that there was a consciuos decision to sacrifice gamaplay design for shiny visuals. That is more of a perception from a prejudice some people have, which for some strange reasons, hate cinematic elements in video games.
"Development of Final Fantasy XIII was a difficult one and ridden with miscommunication between different sections of the development team. Final Fantasy XIII had the largest development team of any previous Final Fantasy game, with some of the work also done in conjunction with the Final Fantasy XV team (then-titled Final Fantasy Versus XIII). At the peak, there were over 200 people working on it, with 180 artists, 30 programmers, and 36 game designers."
" Director Motomu Toriyama has said he lamented that Final Fantasy XIII was mainly criticized for its linear game design, and explained that there were several reasons for it. With a limited amount of development time and resources, the team made the game linear to maximize players' gameplay experience and to provide the same type of gameplay experience to all players. The aim was to offer the most entertaining gameplay experience. This approach provided players with time to familiarize with the battle system and the world, but it led to players feeling like the majority of the game was a tutorial. Toriyama believes this was a big flaw in the game."
The game's director admitted the game had significant flaws. It's actually not debatable. Also this was the largest team on any Final Fantasy game yet, but he still felt resources were limited. Just look at 180 artists, 30 programmers and 36 game designers. Most of the budget is going to artists. There were definitely trade offs there because of the focus on art.
FF X was also linear. Limitation is gaming always existed, either by budget or hardware constraints. Original Final Fantasy last 20 hours of gameay at best, FF XIII takes at least 50 to beat and likely the double of that to play everything the game has to offer
It was not only the graphics, but the game length too. This is not a consequence of graphics getting better, but from big developers trying to stand out in a competitive market.
Remember in the 90s the games teams were small and companies couldn't afford long development cycles, first because it was pointless as most of machine couldn't handle big games regardless. It started to change around PS times
During the 5th generation the hardware started to get powerful enough to justify bigger games and of course the richer developers started to hire bigger teams and give them more time to develop bigger games, as most of games were priced the same the bigger games could, potentially, provide more fun because they would last longer
There was an very easy solution to solve this, attach gaming price to its length, but nobody seemed to care because for many the amount of fun you get playing (which is subjective) is more important than how much content the game has. Indeed if you have more fun replaying a 5-hours game 10 times than playing a 50-hours game one time, then you purchase was meaningful. But I'm starting to digress from my point
Back to the point, when you have your competitor making a 20-hour game, what you do next is make a 25-hour game, then your competitor will make a 30-hour game and then it goes. This of course does not affect only the story, people now wants bigger maps with as many assets as possible, more enemies variety, customization and all that needs more and more time to be made. The number of bugs increase exponentially to how much freedom interaction is allowed, making the gaming development for bigger titles a hell. BOTW 2 is going to have 2008-level of graphics and will need 6 years to be release due to how hard it handle open world games levels in game of that scale.
You can argue most of resources are going to artists, which is true, but they are not the reason for the crappy gameplay. You can't triple the size of the core gameplay team and expect the gameplay to get any better, it won't.
The only thing that will happen if you start to make weak graphics is that you could potentially make games faster, which is true. But are arts teams really the bottleneck of modern gaming development? Or is it the level design teams and gameplay teams which now have much bigger challenges to handle with maps that have dozens of characters moving in complex tridimensional spaces ?
Just for reflecting because I doubt ignoring graphics at this point will make games better.