A polemic topic indeed. Mostly, driven by personal interests and subjective points of view.

Those who are wanting and even working for improving photorealism in games of course will be biased to think this is all bullshutt. Other people who have no access to producing photorealistic content will trend to say photorealism is crap.

I don't want to post my opinion in such complex things. I'd only say that Morrowind was lacking some features, like freedom of gameplay. Instead, they added more photorealism in Oblivion. Gameplay features still short. Somehow, photorealism makes some animations like jumping and crawling look like kraps in oblivion. Anyway, the fact is that I quit playing oblivion BEFORE ending the game. It didn't manage to keep me into the story.

Of course that is my personal opinion only, but I do think that, with or without photorealism, game designers are forgetting some things that seem to be far more important. The action, the story, what happens during the game, what happens with the characters: these will be always the priority facts for a game, as they will with any film despite special effects and production budget. If photorealism will or won't do any good, it solely depends if it contributes or distracts from the story essence and lifespan.