I think people point fingers at the Source engine because it doesn't follow the conventional routes for "prettier" graphics. Where the Unreal games turned up the bloom, adding post-processing effects, lots of specular highlights, and extra detail (creating something akin to the world's most detailed claymation setup), Source games tend to have a sharper, more defined look - an appearance that sticks closely to the polygon-centric rendering systems of yesteryear.
People deride the source engine for getting "old," but really, there's no reason for it to be considered old. If Valve decided to use a different engine, their games would not magically look better. They would not suddenly double in detail or speed. They would simply be able to handle new technologies and visual effects (although texture streaming, I admit, is something Valve needs to be looking at pretty carefully) - not better, just different.
New game engines were fashionable around the turn of the millenium, but this was mainly because of the rapid pace of technological advancement. Heck, dedicated graphics cards were just coming into their own! New features were being introduced on a yearly basis, new features that rendered the old systems obsolete. Nowadays? You've got mainly software features. The most notable new thing in recent years is tessellation, and that's been passed over because the support for high-end PC gaming efforts just isn't there. We have no need of new engines; simply creative uses of the old ones.
