I'm torn by how I feel about the current aesthetics. I actually like how the cities look, and the individual pavilions and all that (for example, the entrance to the Pugilists' guild in Ul'Dah, I think, is very well done). I generally like how "real" everything feels. But anything outside the cities is more or less dull and repetitive, and I can definitely see the need for more variation and...color.

Still, the biggest thing holding back immersion for me in FFXIV has nothing to do with graphics or art design -- it's the lack of things to do and an altogether silent community (outside of linkshells).

The ones advocating that art direction can stand on it's own without caring crap about the graphics supporting it, normally do so just to look "artsy", but that standpoint is hardly conductive to quality. Quite the contrary.
There are plenty of 2D games, and older classics, that have fantastic art. Bottom line is that the whole aesthetic debate is chock full of differing opinions, so obviously there will be disagreements. I don't think anyone's trying to appear "artsy" by claiming that pleasing art styles can be accomplished without groundbreaking hardware. It's been done.

And just to show how different opinions can be, I've always thought Killzone 2 was uninspiring and boring. Graphically, it looked nice when it launched (not sure how it's aged), but I never once felt immersed by the gameplay, much less its art design.