I think there are two issues being touched on here. The physical quality of the game (graphics and sound), and the game play (The Story and the user interface). Better graphics and sound are unquestionably better, but they are nearly useless without a captivating story to tell. If it wasn't so, the printed media would be dead by now. Most of the books I ever read had a very low ratio of graphics to the printed word. More day to day things like news may be another unrelated story.
Progress is necessary to make things better. I remember buying Tex Murphy "Under a Killing Moon" when my 20 MHz 386 DOS 3.3 machine couldn't possibly play it. I'd never heard of it, but thought it might be cool when I upgraded my machine. IT WAS. I even bought hardware like MPEG2 decoder cards to play DVD games. I still have it to play some of the greatest adventure games of all time, even though its a dead end now.
I think the emphasis on graphics has gone too far though at the expense of The Story. Even realistic movie quality graphics will Never make a bad story into a good game. If you want movie quality graphics, we had it ten years ago with 100 MHz Pentiums, MPEG2 decoder cards, and DVD games. No 3D movement then, though, no biggie. Point and click is just so easy. Slide show games are disorienting and give me a headache.
Anyway, I upgraded to XP when Win98SE wouldn't cut it alone anymore. I still run both operating systems. Right now one of my major concerns about Vista is DX10, not just backward compatibility for which I already have hardware. Just look at the limited benchmarks so far. Take a look at:
http://www.anandtech.com/video/showdoc.aspx?i=3029I think the games industry has some growing pains ahead. I'm glad I have a stockpile of older games to play.
Albert