I find it amazing how people can make that claim pointing out such and such crappy Playstation 2 port as their 'proof'. If were going to be judging Wii's graphics capabilities we should judge them by their best, who judges the Xbox 360 and Playstation 3 by 'Need for Speed Most Wanted', likewise why do people judge the Wii with the lowliest Playstation 2 port? Wii has great looking games, especially when they are developed exclusively for it with the hardware in mind.
Lets take some examples,
Sonic and the Secret Rings is developed exclusively for the Wii, doesn't look half-bad,
Compare it to the Xbox 360 version of Sonic,
Metroid Prime Corruption also looks great, retro is targeting 60 FPS in the final release,
Super Smash Brothers Brawl doesn't look half bad either,
Finally, Super Mario Galaxy, running at 60fps really shows off what the Wii can do,
Of course there are more games, SSX Blur, Final Fantasy Chrystal Chronicles, Resident Evil amongst many others. Theres still a few years for the Wii and if developers can focus on art direction they can still make beautiful looking Wii games and at the end of the day thats all anyone can really ever ask.