I think there are two sides to this.
On the one hand, graphics definitely are no replacement for a good aesthetic.
On the other, a lot of people realize that, then jump in the other, equally silly, direction and say that graphics don't matter, ever, under any circumstances.
To illustrate why they do, let's look at Far Cry 3 and Okami.
Far Cry 3 has pretty good graphics supporting a solid aesthetic. But since the game is about realistic jungle survival, lesser graphics would make the game worse. And I think they would even lessen emotional investment to an extent. I'm not claiming that they're the primary source of said emotional investment, but I feel that in this particular game, they are beneficial, as they allow for good emoting from NPCs. Certainly not the be-all-end-all of investment, but a nice plus.
On the other hand, Okami is not a graphically-driven game at all. Reducing the graphics to the point that they could not support the aesthetic would of course damage the game, but no amount of graphical improvement would improve the game even slightly, emotionally, artistically, or in any other way.
So essentially what I'm saying is that graphics are a tool, like anything else. A developer who just throws them at every problem hoping it will work isn't doing a very good job, but they can be useful when used properly.