Witcher 2, Deus Ex (semi RPG), Fallout NV are all solid RPG's (ok, maybe even Mass Effect). And I have high hopes for Project Infinity and Torment Numeria.
I don't think it's really about some inversely proportional relationship between graphics and story. It's more how the story is delivered and what gaming audience a developer is targeting.
The majority rules when it comes to the target markets the game publishing houses focus on. Unfortunately, the gamer who likes a complex story that you have to truly engage with in order to appreciate is now part of a niche market.
Niche markets are for small, focussed companies and developers. And for a long time now those developers had no way of reaching their audience without the help of big publishers. This left them with no choice but to sign over their creative soul.
When gaming started appealing to the increased number of people around 10 years ago publishers capitalized on that by funding the production of content that I'd only describe as bubblegum games. That's all well and good, everyone likes a bit of easy fun, but the people who really enjoyed the complexities of gaming and storytelling were left behind.
As an experiment, ask your friends who only like games like CoD (or even Skyrim) to really try and experience older or more complex RPG titles. Most would call it boring and point out things like "endless text to read", "no voice acting", "there's so little fun stuff like combat", "too much stuff to remember". Baldur's Gate II & ToB together had over 500,000 words of conversation. That's more words than most trilogies!
Proper characters and plots stem from having a good creative team. The accountants at the publishing house don't really make for good writers, though. CoD and similar follow a forumula. You can break down the game, and create it's sequels by filling in certain blanks. Selling something that's a wholly creative work will always be a risk, because by definition there's little or no previous evidence of it's success. Publishing houses don't like risk. There are a lot of really talented writers in the games industry, and if they were just given some more creative freedom I believe you'd get the characters and plots you want.