Meh, I don't think graphics are all that important for actual entertainment value. Sure it's cool to see some nice shadows or high-resolution textures the first time around, but that's not what makes people come back to the game again and again. Natural Selection is probably one of my all-time favorite first-person games, and it's graphics pale in comparision to Doom 3 or even Quake 3. System Shock 2 is another one that I love, and it looks worse than a PS1 game in some ways. I've played through Deus Ex 1 several times, once on my old 200mhz computer where I was getting around 5 FPS, and it's graphics aren't really anything to write home about (though the large environments are nice).
The problem isn't that innovation doesn't exist, the problem is that it's ignored. How many FPS fans have even heard of Breakdown, a first-person game with an emphisis on hand-to-hand fighting? The popularity of games like SS2, Deus Ex, Breakdown, and Natural Selection put togeather might not even be half as well known as Doom 3, but personally I found them all more engaging and entertaining than Doom 3 (not to say I didn't have fun with Doom 3 too, though). In the end graphics and other media-based aspects of the game like sound may get you to play through the game, but it's gameplay and innovation which will keep you coming back to the game over and over.
And BTW, I have one of the most unique and innovative ideas ever seen in a first-person game that I'm thinking of turning into a Half-life 2 mod, so if that ever gets done I think you'll see REAL innovation in the genre
. I'm not willing to reveal much more yet (well, at least not until real progress is made on it), but the game has no user-wielded guns, no hud, and only uses 7 buttons on the keyboard (all of which are movement-related buttons) yet has the potential for unbelievably complex gameplay...start taking guesses at what it is