As with all games, graphics should be secondary. If it looks clean, without any noticeable flaws, that's all we can ask for. It should also have a certain style. Otherwise, graphics should always take a back seat to story and gameplay. Whether or not the graphics are CG shouldn't matter, either. FF8 and Saga Frontier 2 are examples of CG and hand-drawn art coexisting. Movies, on the other hand, are essential to RPGs. They can only serve to enhance, and never hinder, the storytelling. It would be a crime not to take advantage of the extra storage, as any N64 developer would tell you.
One example where gfx were frontpage news was FF7. Let's be honest. Outside of the brand name, the primary reason people bought FF7 (especially RPG newbies) was for the amazing CG backgrounds and cinemas. While it certainly excelled in the graphics and gameplay department, FF7 failed to meet the standard set by previous games in terms of music and story. In the end, it was just a flashy shell of a game unworthy of the Final Fantasy name. I would've gladly traded the CG for better music, a more compelling story, and a satisfying ending.
For anyone who would argue the merits of movies, look no further than FF8. While I won't deny the fact that it was linear and virtually an 'interactive movie', it was a fun ride nonetheless. Let's not forget it takes 50+ hours to complete. How many movies you know take 50 hours? When was the last time you played a non-linear RPG on a CONSOLE? The intro, ballroom dance, rescue in space, and ending all made up for the games shortcomings. Those cinemas are etched in my mind forever. The bar has been raised. No RPG can make it without movies.