To me, graphics on retro games/retro systems are on a sliding scale.
Let me explain, When I look at a Retro game or a older system I don't judge the graphics of said game by modern standards or "realism" that would be ludicrous. To me art in regardless of its media is not judge by the tools used but how well you used said tools. How well that game utilize its resources to look as visually stunning and aesthetically pleasing as possible.
Now on my sliding scale the SNES game Super Mario World is superior visually to any Call of Duty or Battlefield game.
This isn't nostalgia speaking here, its visual aesthetics. Most modern shooters have plenty of dull grays, browns and some greens. Color wise modern FPS are boring, composition wise I find the design to be lazy. Twenty years from now the Call of Duty series would be as remembered as the now forgotten sport titles that were on the Sega Genesis and SNES.
Yes older polygon games do look dated compared to modern games, its texturing pixelated and its polygon shapes too obvious.
But aesthetically the designers work with what they got to compose the images to their fullest.
Now with 2D games this is how they really shine. Even with pixelization, the environment, the the characters, the sprites, everything POPs before you. Screen sized bosses just look visually more impressive on these retro games than they do on modern games. It gives you the sense that your character/hero/avatar should be in over his head more than what modern games deliver.
Who here remembers the background music from a NES Megaman game (or better yet the moon theme from Duck Tales), for a song thats nothing but beats its catchy.
With the technological limitations the music and sound designers have to better compose their songs. Now try to hum a song from a newer game for the PS3 or Xbox 360, I wait. See what I mean its not as catchy, you might not even remember the tune why is that? The song was composed better.