Well poor graphics do hurt a game if the game has competition, and most games today do.
What's the reasoning behind not having excellent graphics? None that really hold water. If you put out a game that has awesome game mechanics but poor graphics what does it really say about your product, you don't mind putting out a product that's less than it could be? In the end graphics are how you interpret the game world so they're very important.
"I fear no man, but Jim Harrison and Mike Stone are the two last men that I would wish to meet in an alley fight. Jim Harrison's fighting style is not flamboyant or spectacular, it's just simple and deadly!" - Bruce Lee