A few opinions
It is an older engine, but that doesn't mean graphics can't be updated without being done at the expense of gameplay. Half Life 2's graphics vs L4D2's big difference same engine. That being said, I am a believer in gameplay over graphics. I'm willing to play a great/good game even if it has dated/mediocre/plain bad graphics. But for a big name game, which Fallout has become with TV advertisemants and such, more could have been done. I like the change of color palette from FO3 to NV, but something 'more' was possible.
The quality of a games graphics are not always limited by the game's engine. For example, STALKER's engine was able to do alot more than the developer's got out of it. Also, not wanting to push the minimum requirements makes the game more accessible.
Though Valve uses the "Source" engine, there have been major build differences in order to support the games played on it. HL2 was on the base build; with games like TF2 and (I believe) L4D2, the games are using the Source 2007 build.
Most of the time, due to how fast tech moves, an engine can only go so long before it simply isn't capable of putting out "next gen" tech. This is when you have to either invest in making a new build or using someone else's latest engine (like how Epic licenses their Unreal Engine for a lot of games)
To me, the graphics in NV are adequate. Nothing to write home about, but not showing it's age that badly either.