I wouldnt say they "easily surpass the n64" maybe they "occasionally challange" or are "fairly comparable to". It does great in some areas but seems to have a lower poly-output as well as an (understanably) lower resolution.
People love eyecandy, sometimes it can even make a bad game barable. Much like comic books a great looking comic could have a really shit story but people still buy it for the art. An ugly comic might have an awesome story but people only read it if they are attracted to it enough first to want to buy it.
That said, a game can still look great on a weak machine. The cube was already quite powerful, I would hazard a guess that a system only "a few times more powerful" wont exactly be ugly. I just wish they'd show a damn game already so that people know there actually WILL be games for it other than the downloadable stuff. I mean even Sony's third parties are showing early screen shots that arnt "rendered estimations" now.