First of all, there have been some pretty awesome mario games since then. Secondly... I thought the graphics in Super Mario Bros. 3 were pretty fantastic....
I'd even argue that the graphics in Mario Bros. 3 were more appealing than the graphics on Mario 64. In fact, the majority of gamers would probably say that Mario 64 was nevertheless a better game. Annnd... this still argues your main point despite contradicting your other two points.
Anyway, the point is you're right. Graphics don't make a game.
But you also imply that they don't ruin a game, which they can.
You also imply they can't make a good game better. Which they also can.
You even hint towards the idea that good graphics can make a good game bad. Which is absurd.
EDIT: I seem to have missed an entire page before posting the above, and some of it has already been said.
On the other hand, some .slack guy said that graphics don't matter, and only gameplay does. To this I say: try playing your favorite game in the whole world with the best game engine you deem to have ever been designed, on a 4 fucking pixel screen. Since "nothing else matters", I know you will have a mind numbing blast.