Are games bad or limited because of poor graphics? No. Are games better if they have great graphics? Not really.
Depends on how you define "great". I've definitely played games before where the art direction and general visual artistry was a huge part of the selling point. But that doesn't have to be photorealistic - "great graphics" can be something like pixel art majesty (CF: REPLACED).
That being said, some games are certainly elevated by incredible photorealistic visuals. Bodycam has basically built a whole premise on it, and it would certainly be a lesser game without its graphics.