You separate the two sides way too much and I think that you also confuse the context under which people discuss graphics......
Those that demand better graphics also want good gameplay. But you will see them many times complain about the visuals depending on the game they are discussing, the platform it is on and its ability to immerse the gamer.
For example dont expect someone who owns a 360 or a PS3 expect from a big title to have mediocre graphics like Resident Evil. They want their money's worth. They view the gameplay and the visuals as a part of the overall package's quality. People form expectations based on the experience they want to get from a certain title. People have big expectations about the visual expression in realistic war games too. They call it immersion. Sonic Unleashed on the other hand doesnt need the same technical achievements to be liked visually and as a game. You dont have to include realistic animation, you dont need super crisp textures, you dont need huge realistic explosions everywhere or realistic lighting.
In other games/genres the standards may be lower or different. Braid is considered beautiful and fun by the same people that may complain about a low resolution texture in MGS4 or choppy animation in Too Human.
The same people could even own a Wii and enjoy Mario Galaxy without any complains regarding the visuals.
edit: Reading again your post I think we are saying the same thing
I agree
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