But can you really blame every design flaw on graphics? Sweet pixels can syphon resources and time, but then you have something like the Quest Compass. World of Warcraft didn't have that - but then some fan went and created the QuestHelper addon, which added the functionality of a compass - eventually incorporated into the base UI years later.
You could look at the compass two ways, either a necessary evil because of the wandering NPCs, which are rooted in graphical presentation to some degree, or as a concession to idiot broader market gamers, which were courted in part to cover the cost of building such a large, pretty game. I'm sure wanting to get rich factors in as well with the mass market thing, but in the end the point remains that higher budgets demand higher purchase numbers, which meant courting people who didn't play Morrowind.
Further, aren't graphics also getting cheaper to make? Sure, there will always be new fronts in the impossible quest of photorealism, but isn't it true that the cost of graphics weighted more for Oblivion than for Skyrim?
I'm sure. Epic Games made some comments about more and more middleware like speed tree countering rising budget costs. I'm sure if we kept graphics more or less current for another 10 years eventually indies could make a Skyrim. We're not though, new consoles come out this Fall, which means a new PC upgrade this Fall for me, which means higher and higher graphical demand which means higher budgets which means more demand for high sales numbers than ever before. It's a recipe for disaster if you look at it on the surface, the Xbox 360 generation was already turning middle-class games into failures, but I would guess the new consoles will rapidly diversify in their offerings. Perhaps only one retail game will come out a month while middle-class games go digital and sell for a lower price point, sort of like Steam.