Well, I still reckon some games on the C64 have great graphics, like Way of the Exploding Fist or the first Impossible Mission. There are different standards by which to judge, and I'm the first to admit that newer doesn't automatically equal better, because sometimes it doesn't, sometimes 16 colours and tiny resolutions is all you need. It depends on what you're doing.
My point about Zelda though was that the graphics there actually changed the way people played the game, and how at the time people were really impressed by that. By today's standards, those graphics might be regarded as being poor, but back then they were regarded as a breakthrough (impossible until n64), it was like watching Zelda (and Mario) step into a whole new dimension. It didn't mean that the Zelda games before that were bad, it just meant that some prior game design limitations (typical top down or side scrolling conventions of the past) had been removed.