From my own standpoint, I really do think the graphic quality of a fangame is important. I've been working with sprites and graphics for fangames for quite a long time now, and I feel like the higher quality the work of the sprites and overall graphics, the smoother the game will look, not to mention that it feels much more like a good amount of effort has been put into making the game look nice.
Of course, if people have only recently started spriting I can't really expect them to pump out amazing work either if they have no experience whatsoever so I'll cut slack for those people, but if the graphics look as if they were half-assed and I know that the person who made them can do a lot better than they've put out, I'd honestly feel like it's a bit disappointing, mainly because it could add so much more to the atmosphere of the game if the graphics were done nicely, even if it's very simplistic and depends on the generation the graphics are from.
Sure, they may not add much to a story itself, but it most definitely helps with the look and feel of the game, and more importantly setting an atmosphere. If you're going for i.e. a ruined town and the graphics look all sloppy and messy, you usually get the impression of "Okay... I get what they were trying to do here, but...", while on the other hand, if you create and use convincing graphics, it's usually much easier to convey a concept or idea to the player, and therefore could also be a tool to explain things that aren't as easy to explain with text only.
So... I myself consider good graphics as my viewpoint as an artist, but from a more objective standpoint it honestly depends on if you're using graphics to create a certain atmosphere for a game, or if they do not add much to the atmosphere of a game (so a more simplistic game that is more oriented towards story than looks or isn't going for a balance between the two). It just really, really depends on how much influence the graphics are supposed to have.