I'm totally in support of the idea of a technological 'cap' of sorts. Aesthetics is firmly secondary to a quality storyline and playability. There are times when graphics enhance the experience, but if they were really all that essential, people wouldn't still be playing NES games. I really don't need a game to look any better than Skyrim does, for example. What more can be gained beyond what the visuals in this game capture?
Aesthetics and graphical fidelity are separate things. Aesthetics are what make Diablo 2 still look good despite its laughable graphical fidelity.
Also, while Skyrim's graphical fidelity is adequate, the incredibly poor animations really do detract from the experience. It's hard to feel immersed in another world when someone sits down and their sword clips right through the chair.
But yes, plot and gameplay are getting shafted lately. Although the reason for that is not simply that developers are focusing on graphics.
Plot is getting shafted because the casualization of gaming has led to an audience increasingly disinterested in the plot, so why bother? For example, most people playing the Modern Warfare or Battlefield games jump straight to the multiplayer, so why bother coming up with an interesting story? Or even one that makes the slightest fucking bit of sense. This even extends to something like Skyrim, which you'd typically think of as a hardcore game. The success of Oblivion brought in a much bigger audience, one whose intellectual fortitude Bethesda seems to have fairly little confidence in, so the depth of the lore and the stories the game tells have been reduced significantly in favor of a simple system that gives players bite-sized quests. Sure, all the lore from the older games is still present, but they haven't added or expanded much, and what they have added is basically just Norse myths with the nouns changed around a bit. So Skyrim is deep compared to most current games, but compared to something like Morrowind it's nothing. Still a good game, but the story has clearly been shafted to suit a more casual audience.
As for gameplay, triple-a games cost a lot to make, and the people bankrolling them want a guaranteed return on their investment. Thus they've become as risk-averse as Hollywood.
Sorry for the manifesto. I'm still kinda pissed about the new ME3 debacle.