Considering how lazy bethesda was with the last two games they churned out, I'm positive elsweyr would be nothing but sand with the occasional puddle of water as an "oasis". I don't see how a desert is interesting at all.
Elsweyr is described as being dry and deserty in the north and lush and jungley in the south
that's a pretty wide range of environments, quite frankly. And, obviously, no matter where they choose, if they're lazy about it it won't be fun.
And on another note, graphics aren't the only reason to enjoy a game. Morrowind's graphics are fairly unadvanced by today's standards, but the story and world are still super fun to play in. Environment design is much more important than graphic realism.