The effort it took me to make this site gracefully degrade was completely not worth it, even though it wasn't THAT difficult for this site. However, my client actually only wanted it to work "on the iPhone".
Furthermore, now with plans for Google to expose native hardware APIs in their mobile browser via JavaScript, how do you gracefully degrade access to the camera or accelerometer?
Finally, on desktop browsing experiences, this argument won't even be around soon, mainly because the current battle is native versus browser (engine) not JS versus non-JS. We are building apps in the browser that are giving us native desktop functionality. You simply cannot do this at the level that people expect (in regards to user experience) nor functionality without JavaScript.