The thing is:
People are more likely to buy a game if it looks awesome. They might not play it for long and eventually mouth-to-mouth propaganda might stop more people from buying it once it's known that the game itself sucks. The purchases start of high, might even climb a bit, but eventually drop towards zero (especially if another game with better graphics comes out shortly after).
If a game has mediocre or bad graphics but is overall an awesome experience with a deep and thrilling atmosphere, at first only a few will buy it, but eventually people would start hyping it (mouth-to-mouth propaganda again) and the purchase rates would slowly grow and eventually remain constant. Even if the rates drop, they might eventually grow again and even years after the first release people would still be buying it. Depending on the focus group such a game can be as successful as StarCraft (it was successful enough that Blizzard would still release updates and patches years after it went gold, and it is still a discipline at many LANs these days) or the Fallouts (although they were successful only in a niche market, there's an awful lot of people who know it and out of those there's an incredibly high percentage of people who like it or even love it, I'd suspect that out of 10 people who played either game through roughly 9 people liked it or loved it).
The former kind of game will bring in some money IF it manages to build up a good hype (the longer the game is hyped the better, but as of a certain time the hype might die off) and might even sell enough to become a GOTY (which means nothing these days), but will last only until someone releases a more shiny game (and if the game itself is done too badly and the graphics really are all there is about the game, it might even stop selling very early despite the eye candy -- happened so with C&C2: TS, which tried to live off its hype and failed miserably).
The latter can establish a good and faithful community or "fanbase" willing to buy sequels as long as the sequels can live up to the standard set by the initial games. As proven with FO: Tactics, the "fans" might even allow a couple of spin-offs to be successful as long as the company doesn't stop producing worthy sequels (heck, had IPLY really produced FO3 rather than FOBOS, they'd even have been able to sell a FO:T 2).
It's also a question of which kind of reputation you eventually build up. Had IPLY not comitted suicide by focussing on consoles, they might have become known as a quality producer of good RPGs. If they hadn't developed games for a niche market but for a more mainstream one like FPS or RTS, they might have been known for quality games on those markets -- given that they would really have developed quality FPS or RTS games, which I doubt.
Westwood (which succeeded with C&C and C&C: RA, but then went downhill) became known for the first RTS games successful with the mainstream market as did Blizzard (which became known with WarCraft 2, then established itself with StarCraft). Until they screwed up (two names: C&C2 and SC: Ghost) they had a rabid fanbase willing to buy anything.
Actually this all boils down to a simple rule of thumb:
If you need quick money and can afford a huge investment, produce a game that focusses on looks -- but keep in mind that you are gambling because any second someone could come up with something that looks twice as impressive.
If you want to establish yourself on a market, produce a satisfying game with a deep atmosphere without relying too much on the looks. Be prepared for low sales in the first months, but if you did your job well, you might succeed -- as long as you don't betray your newly founded fanbase.