[Fyron]

Forget about the money; time is the relevant factor. Fancy graphics engines require programming time to make. Gameplay features require programming time to make. There is a limited amount of man-hours available. More time put into fancy graphics engines means less time for gameplay features. The textures and sounds and even models can be made by non-programmers, but it takes a hell of a lot of time to design and program a smooth 3d engine; orders of magnitude more than a 2d engine. Where the company is willing to invest time is the issue. Some can devote enough to both parts, some (eg: most console developers) devote too much to graphics and not enough to gameplay, and some probably devote too much to gameplay and not enough to graphics.

And as you said Graeme, you can't just keep throwing more programmers at the task and get increased productivity. While you can certainly benefit from more if you only have 1 or 2 (1 person doesn't have to make the entire game engine and graphics engine), productivity comes with an inverted parabolic curve.