This decision is entirely up to the user.
The whole reasoning behind Minecrafts original implementation of low-textured graphics was to create a retro-defined feel while maintaining a volume of simplicity; not to mention, it actually worked well since the blocks, after all, are just blocks as compared to pixels.
More reasoning is that this is being derived from a Java engine, meaning that graphics handling and memory capabilities are limited in comparison to higher-end engines that you see most games being developed on nowdays. Besides, realistic textures really don't do much for Minecraft since it wouldn't feel right for the gameplay. There are 64x64 texture packs that you can use out there, if equipped with mods; yet, it still feels as if it takes away the very soul of the game.
So, no. Minecraft doesn't need better graphics. It's perfectly fine the way it is. After all, graphics don't make a game. Remember the days of text-based adventures?