The Elder Scrolls always tried to achieve believable graphics,Oblivion isn't cartoonish at all,or at least wasn't when it came out,it went for realism
"Believable" and "realistic" aren't necessarily the same thing.

They also took pictures of new york when creating Bioshock, and that is very cartoony in it's own way.
I've got to say.... I really don't understand this modern obsession with labeling everything non-photo-realistic as "cartoonish".
For one - I don't see most of the things people label that as being actually "cartoonish".... i.e, they don't look like cartoons, at least not the ones I've watched.
Stylized =/= cartoon. The art style of a game can be quite distinct, in all sorts of ways, none of which make it look like something Warner, or Pixar, or Disney ever did.
And it's not just bright colors, either. That's the one that really gets me - go back through the history of video games.... bright colors everywhere. People in the 80s didn't look at their games and say "that looks cartoonish", they just thought that they looked like videogames. Fast forward 30 years, make a game the same way, and people start throwing "cartoon" around. Just because something isn't "realistic" (oh look, grainy brown & grey textures) doesn't make it "cartoony".
(Also, back when Oblivion came out? People talked about how realistic it was. Just goes to show how much the perception of graphics changes over time. Which seems like a clear reason to go with a good, solid art style - something that holds up, even when it's tech becomes outdated - rather than trying to push for just mere "realism".)