An appealing-looking artstyle will often trumps high-fidelity graphics, which have also become more of a liability in the development of games nowadays by taking way too long to come out or bloating the budgets (meaning less experimental stuff in return). I like japanese games because they are actually fun to play regardless of their technical prowess in terms of visuals, and some indies in the western side fit into that category as well.
Not going for the "current gen graphics" path, or whatever does this mean, doesn't mean there is a lack of talent among the development teams.