I don't think ultimate graphics matter so much to the average gamer as much as gameplay. When Final Fantasy finally got some characters moving that didn't look like legos, people were hooked who'd never wanted to play an RPG before. There's a certain level of realism that people want, but frankly, since the days of the Dreamcast, we've had them. I don't think anyone except a few pure graphics whores will complain about the shot of Link in the previous page, and I'm positive that in motion, he'll look a hundred times better.
Look at Resident Evil 4 on the GameCube. Those graphics were frighteningly real. Now it's funny to think of the Wii as underpowered, since it'll be the most advanced Nintendo console yet, but the graphics potential of the Wii will approach those of the 360 in no time. No, not as many polys on screen, not quite as high a resolution, not quite as many interactive objects on screen, but really, who will care? Not most people. They will simply want graphics as good or better than the PS2 delivered, and they'll get those in spades.