PnP RPGs don't even need graphics. However in particularly regarding a current gen TES game, which is not really comparable to PnP or ASCII in terms of presentation, expected or otherwise. Graphics are important. If it is not pushing the envelope in that department then it is doing it wrong.
There isn't some mystical compromise or balance that must be struck between the 2. Best of both. Every time.
You could do ADOM, or Nethack in 3d
http://i271.photobucket.com/albums/jj125/Gizmojunk/adom1.jpg
Don't get me wrong... I love great graphics... but if they have to cut corners to maintain the pretty pictures, its not worth it to me.
I'd rather a text-based RPG with no graphics, but with an engine that taxed a quad core with 6gig ram ~using it for interactive fiction, and chat-bot AI.
When I first played Fallout 3 the machine was minimum spec. The game looked great, but as soon as a fight occurred, the combat AI kicked in, and the frame-rate dropped to single digits.