I think that's part of the story, but only part.
Certain games of every generation do a much better job of making the limitations of their hardware into part of the aesthetic style. Certainly color can be part of that. But I think if games like Borderlands or Jet Set Radio are still remembered for their graphics later, it isn't necessarily going to be so much about color or cel-shading as about the fact that the designers set their sights on a certain kind of visual style or tone and achieved it, rather than just aiming for what Jim notes is the ever-rising bar of "photo realism".
I think if we look back on the grim-and-gray shooters' graphics with disdain later, it's going to be less about lack of color and more about highly detailed faces on bodies with only slightly more complexity and articulation than stick figures (unless they're female, in which case they will also have jiggle-physics-endowed boobs.)
Certain games of every generation do a much better job of making the limitations of their hardware into part of the aesthetic style. Certainly color can be part of that. But I think if games like Borderlands or Jet Set Radio are still remembered for their graphics later, it isn't necessarily going to be so much about color or cel-shading as about the fact that the designers set their sights on a certain kind of visual style or tone and achieved it, rather than just aiming for what Jim notes is the ever-rising bar of "photo realism".
I think if we look back on the grim-and-gray shooters' graphics with disdain later, it's going to be less about lack of color and more about highly detailed faces on bodies with only slightly more complexity and articulation than stick figures (unless they're female, in which case they will also have jiggle-physics-endowed boobs.)