I don't rule out one style or another, and enjoy playing both, but feel a game should stick to one or the other throughout, with only a few exceptions that might be necessary to the plot.
I agree with you. I was very disappointed when the Grim Tales series went from having "realistic" characters to having goofy cartoons in The White Lady.
For example, check the cartoonish designs of the children at 0:26 and the adults at 6:15 into this video from The White Lady
https://www.youtube.com/watch?v=CGUjJSadgQsI think the only half decent character design in The White Lady was Richard.
Compare the characters in Grim Tales: The White Lady with those in the previous games.
For example 1:44 into this video from The Vengeance
https://www.youtube.com/watch?v=6HmAwr9lQ4QI have to think the cartoonish characters in The White Lady were a cost-cutting measure. The developer must have known it was a mistake because they went back to using more naturalistic character designs for the following game (The Time Traveler).
For example, 14:50 into this video
https://www.youtube.com/watch?v=0SINeiSfxIwNow if The White Lady were from a new series, and those same cartoonish character designs had been used, I probably wouldn't have minded so much. But a series needs some consistency, and going from detailed graphics to muddy, cartoonish ones isn't likely to impress gamers.
I've seen examples in other games too. Sometimes a game has realistic adults but cutesy, cartoonish children. I guess they don't know how to draw real children.
On a related subject,
There are very few games that can get a pass for using character models that don't fit with the backgrounds -- cartoon characters on a naturalistic background or vice versa. Unless there is some plot related reason, or the game is so obviously stylized that it's clearly intentional, having characters that look like they don't belong in the gameworld looks like either lack of artistic skills or a cost-cutting measure.