If you are, indirectly, comparing the Wii to the PS3/360 Simply Saying "graphics vs controls" is narrowing it too much.

You also have to consider that better lighting/mapping/physics also come into play. Nothing can create a better sense of realism then having your character interact with the environment with almost perfect real-world physics.

 There are no realistic tennis games on the Wii. The wii basically just uses the accelerometer to determen when to swing. (like a button) and uses the 'tilt' to determine which side, to swing on.

There is no. 'angle' Upward swing, Downward swing, or anything else. Without the ability to 'realisticly' play tennis. So far, the best tennis game for the Wii... is no better than a tennis game for the PS1. There are no 'realistic' motions, other than a 'stupid' swing. I love tennis. Wii Tennis = not 'realistic' 

Graphics>Controls

To me, the Wii pointer makes the games easier to play. Nothing more. The accelerometer is more of a nuisance, and adds no realism to a game at all.

Graphics for the sake of graphics produces crap (see Lair) ...
Motion Controls for the sake of motion controls produces crap ...

Both are worthwhile improvements but I would say at this point in time that input devices have been ignored for far too long and it is about time we started to see revolutionary improvements. In an ideal world, all next generation hardware would see improvements in graphics and input on a similar scale to what we have seen in this generation

I agree with you kwaad, Wii controls aren't in the least bit realistic, but they do make the games more fun to play. I like graphics better than motion controls now, but as soon as there are 1:1 motion controls, games will be more real. But, I will wait to make my judgment until 1:1 motion controls really arrive.

Lets put it this way. Would you rather have full immersion virtual reality (smell, taste feel ect) with N64 level graphics (but as much stuff on screen as you want, and as much detail as you want, ie 10 books full of writing, just shapes and things are at N64 levels) or would you have photo realistic game play with an Xbox 360 controller?
both are important, control more so. In video games, it goes In ovation-refinement-innovation-refinement-innovation. However, last gen was the analog stick refinement gen. This gen is the innovation gen. Microsoft and PS3 failed to innovate. They failed. They are a Gen behind, and their sales are hurting for it. (high prices don't help either :P)
Controls>graphics
Gameplay>graphics
innovation>graphics
creativity>graphics
Level Design>graphics

Graphics are what hold a game together. Its like the eggs in a cake. You need eggs for the cake, but really good eggs won't make the cake that much better than average eggs. In video games, the eggs are constantly improving anyway, so why waste time and money on the top of the line eggs? The other ingreadiants, how the cake is designed, and the bakers skill are all more important than the eggs he uses. But you still do need eggs.

Actually, there very much IS an 'upward swing' and a 'downward swing' in Wii Sports tennis.  You can 'scoop' upward to hit a long, slow lob, or chop at the ball to send it low and fast (and risk hitting the net, which I do far too often).  You can even put spin on the ball to get it to take a curved path.  If you swing nice and steady, you'll see that the ball isn't spinning.  The spin is the reason the tennis balls are red and yellow instead of solid green; it's so that you can see what the ball is doing.  What the game does not do is distinguish between forehand and backhand swings.  I suggest you go a few rounds in the practice mode and see exactly how much control you have over your swing.  You might be highly enlightened.

Anyway, the technology just isn't there yet to have 1:1 motion controls.  I'll be the first to admit that.  But that doesn't mean that every game that uses the accelerometers is stupid, either.  The immersion in Wii Sports comes not just from the accelerometers, it comes from many different things.  You swing the remote like you would a tennis racket.  The remote plays a "whock" sound on its speaker when you hit the ball.  The remote vibrates when you hit the ball.  Your Mii is in the game holding the racket.  All of these things come together to create a very satisfying experience.  For me, this is more satisfying than ultra-realistic graphics.

Another note I'd like to make about graphics is that graphical horsepower and technical competence do not make a game immersive -- it's what you DO with the horsepower that matters.  Fluid, life-like animations make a game immersive, just like stuttering, awkward animations can ruin immersion.  A coherent vision of the game world and attention to detail makes a game more immersive, just like models or textures that look out of place or needlessly repetitive can ruin immersion.  The more graphical horsepower you have, the more resources can be brought to bear to create visual immersion, but it's more about art than it is about pixels and polygons.  Typically, you don't get noticeable differences in things like animation quality and world design until you have an order of magnitude increase in horsepower.

The same can be said of the Wii Remote.  Accelerometers, rumble, and built-in speakers do not automatically make a game more immersive, it's how the game uses them that counts.

controls=graphics

Realism that can be seen doesn't necessarily give the effect of being real. Hell we watch movies such as Lord of the Rings trilogy and see the amazing visual affects but that doesn't allow you to feel actually inside the movie. Yet if you were to be able to have a controller that allows you to use it as a bow and arrow and what not then you definetly do feel more attached in the game and thus it feels more real.

Realism in the virtual reality is about being able to believe that you are the main character. I personally think it needs a combo of both to achieve this. I think an advance virtual reality set would definetly achieve this. Which tied in the visual part along with the control part. But ultimately control is what's going to give you the realest feel out of them as it physically gets you more attached to the sequences of the game.

I do think controls>graphics but at the moment it doesn't feel real enough, imo. I think a balence of both should be used...