Well, just to be a sheep and say what everyone else has been saying: IT depends on the game. Certain genres scream for realism, while others would look better with stylized graphics.
Shellsh0cker post=9.75164.859277 said:
Horror especially needs realistic graphics; if it wasn't so real, it wouldn't be scary.
I think horror could be done stylized and still be scary. Or at LEAST freaky. Take Fable 2 as an example: OK, There is a Demon door spoiler here, so if you don't want to hear about it then...you know. Don't read. And I consider Fable 2 fairly stylized. Not to the 'Okami' extent, obviously, but stylized nonetheless.
In one demon door you enter, you are presented with this beautiful snowy path in which to walk down with light snow falling gently around you. At the end said path is a quaint little cottage, windows glowing with warm light within. The door is open and inviting, showing off a fireplace and food filled table inside. As soon as you step into the house, there is a flash of light, the world is suddenly a dark gray hue, the house is now a broken down, old husk of what you just saw, and the house is littered with skeletons. Man that freaked me right out. I was like 'Aww! Nice house! La la la-OH CRAP!'
It could work in other games.