The debate is not performance vs. graphics. People will always complain if one of them is given more importance. Let me use Doom III as an example: People complain that performance wasnt so great, specially if we consider that most of the game is dark and has no big open areas. Graphics (textures, models etc) are nice, with its consequent hit in performance. So far so good. Now imagine what would have happened if there were less world and model polygons and crappy textures. People would have complained that the game should've been better, even if that version had a great performance!!
Engine scaleability plays a big role here. Adjustable performance is the key to making everyone happy.
(I thought this was an important Source engine feature, but the difference between running HL2 in my computer @1024x768 with max effects and doing the same thing @640x480 is a meaguer 6 fps in most maps...
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