*raises hand*
Graphics are essential - It's like the bricks on a house. They're not an integral part of the structure like the foundation or framework, but no one's going to buy a house with no or very poorly made and laid bricks

On-Topic: this article more accurately sums up The Elder Scrolls Online, IMO: http://kotaku.com/5907797/the-first-screenshot-of-the-elder-scrolls-online-sure-looks-like-world-of-warcraft
I see it differently.
The gameplay is the cake. The graphics are the icing.
You can have the most beautiful and delictable icing crafted by master bakers, but if the cake is a stale brick, it doesnt do much good.
However a moist and delectable cake covered by mediocre icing is a bit of a shame, but no real gourmet offense.
I dont
care about graphics. Not one bit.
But, as has been explained above by another poster, its the art style that is in question here and not so much the quality of the graphics.
I dont really know, the art style seems Elder Scrolls to me, but some people dont like it so your mileage may vary.