See, here's the thing with graphics.
For the graphics engine, you keep your best-and-brightest up to date on industry developments and what the newest software techniques are, and you dump a load of time into making sure it works on as wide a variety of modern hardware as possible. It's difficult, but the method behind managing a group to develop a good graphics engine is well-known. It's kind of a solved technical issue.
For the actual art resources, you get some good artistic directors that can bring people together (very important), and then you throw manpower at them as hard as you can. Good, skilled manpower, but still, once you have direction, it's shee number of skilled artists that determines how much you can put in there.
Actual design needs good designers--and GOOD designers are still incredibly rare in this world. And to generate that much content, you need good writers--and I daresay it's WAY harder to manage writers than artists. It's gotta be. That's the only way to explain games like Fallout 2. (Good art directors are just as hard to come by, really...which means you can have shiny graphics that still don't mesh or aren't attractive or are boring.)
I don't think anyone knows of a good, solid method of designing good games, or creating good writing. Interactivity is really hard and it's a design challenge as much as a technical challenge. Hey, I hate games with good graphics and poor gameplay as much as anyone else--but I think my point is that you can take any game, well-designed or badly designed, and give it awesome graphics and an awesome graphics engine by throwing money and people at the problem. Designers and writers are still very limited. You CAN'T take a poor design and make it better by throwing resources at it, but you can make it pretty.
It's not that they're focusing all their resources on graphics instead of design. It's that there's not enough good designs to go around I think.