I don't think Minecraft is a good example. Many users use modifications that create more "realistic" graphics and they feel they make the game even better. Minecraft's graphic style isn't terrible, but better graphics don't hurt the game. The assertion that "more believable graphics are certainly going to help" is absolutely correct.

Example: http://i.imgur.com/shM90.jpg vs stock Minecraft, most people much prefer the linked image and find it more immersive.