That depends on the genre. Plenty of people still play text-based MUDs, although I doubt many people would play a text-based RTS.

Sure, you could make text based games. However, I would personally just consider them learning projects. In the modern world, I just don't think they would hold the appeal, certainly not for anything commercial. However, this isn't to say that you have to have Enemy Territory: Quake Wars graphics (though I think most of us wish we could ;) Game play is still the most important thing in my book, but I think that graphics to play a part in allowing the gameplay to come to the surface.

I think it could open up some new / different types of gameplay. With as much energy put forward into making quality art, top notch graphics, and rendering them at blazingly fast speeds, a game without all that could focus more on gameplay features, story, and design. This being based on the current industry where time is a problem when deciding what to add.

Text only games have been around for awhile. While a majority of them out there in existence now are muds,mushes, and moos, there was a time when you got a really good adventure game. Zork, being a more popular one, spawned many clones that had equally funny or entertaining stories and worlds. Some of my first projects were text adventure games that tried to mimic these types of worlds. It helped me focus on creating a game from a descriptive story setting full of things to do rather than worrying about resource management (graphics modes,loading, image formats,etc).

For those with creative imaginations, the world described in a text based game is just as or if not more descriptive than current graphics to date. Just some thoughts.

When kids go out to buy games, and are given a box? They turn it around too look at the pretty graphics. Gameplay comes into not ditching the game, replay-value etc. Sad, but true