Probably we think now that we have good looking graphics but after 15 years of development they aren't so good anymore.. AMD/ATI and NVIDIA have done great work over the years.
Along came something like the SNES, which although it shares the same resolution as the NES (256x220 or something along those lines), it had access to 32,000 colors instead of the 64 available to the NES, and it could use up to 16 per sprite. That's the main reason why SNES screenshots look so much better then SNES screenshots.
Once 3D came along, graphics looking 'good' became more complicated than just resolution and color depth. The original Playstation suffered from texture maps that showed artifacts, became distorted, and had edges that appeared to 'jump' around.
As the hardware became faster and fixed those issues, more techniques were added for lighting, shading, and a hundred other enhancement which got us to where we are today.
Also, around the time when the switch to 3D graphics happened, the 3D ones looked a lot uglier than some 2D games that seemed prettier, which had better art and colors.