A good mix of both is needed (in most cases) for successful games. Minecraft is an exception, pixel-y graphics that most would consider bad, but the gameplay is great (to a lot of people, too). I personally don't play it, but I do play Ace of Spades occasionally. It's like Minecraft, has the same graphics, but the gameplay is a tad different. I'd call it a war game with building elements, you can build things like in Minecraft, but the primary focus is fighting.
Minecraft is an exception, pixel-y graphics that most would consider bad
They are pixely, but they aren't really "bad" either. It's more unique than anything. I mean, seeing that boxy cow move past you with inaccurate leg movements is hilarious, but you still know it's a cow the second you see it.
There's also the option of HD texture packs which increase the resolution on each block from 64x64 to like 256x256 or more. While stuff is still blocky, the individual textures aren't bad.
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