A game which got confused as to what it was trying to achieve graphically : Oblivion. Half the time this game is trying to achieve photorealism, the other half it is trying to be artistic (as really befits its subject matter).
"Artistic" and "photorealistic" are not mutually-exclusive terms. After all, photography is as much a valid medium of art as any other medium. Realism itself can be part of the artistic intent; it doesn't make a work have less artistic merit.
The question is, did they choose a realistic style to fulfill an artistic goal, or to fulfill a commercial goal?
Actually, this "realistic != art" idea is common outside of video games as well. In photography for example, there are a lot of narrowminded people who say that colour photos cannot be artworks simply just because they have colour, and somehow colour automatically means more realism (a primitive view, imo).
And of course the technical stuff is important in case of video games. Not only does this determine the level of detail of models and stuff, it also determines the artistic freedom the artists and game designers have. That's why it does matter an extreme lot how many polygons can be drawn at a time, what resolution textures can have, how many post-processing effects can be applied etc.. Aren't people aware that also those games that provide original or daring (and supposedly minimalistic) styles usually use all the processing power they can get?
The technical stuff is more in terms of detail. Better hardware allows for more detail. But art doesn't have to be detailed. Problem is, the general consensus today is that more detail = better graphics. Of course, more processing power gives developers more freedom, but if they don't take advantage of that freedom what's the point? Why does every single mainstream game have to push the hardware to the limits? That doesn't seem like more freedom to me.