The graphics of the game aren't anywhere close to being "bad", per se, but I think alot of the people out there may have been taken aback by the blurry factor. GTA IV seems to have this blurriness, fuzziness thing going on (not just the depth of field effects), and I think that caught alot of people off guard. I think the real problem with that, is not so much that it's there, but that none of the screenshots or videos prior to release revealed these issues. So when people first plopped the game in, and got to the part of the game where they first stepped out of Roman's apartment and into the sunlight, they saw this general blurriness or fuzziness, and it kindof shocked them.
That exact situation happened to me.
Having said all of that, in no way, shape, or form, could I consider the graphics of GTA IV to be "bad". Sure, it would be even more awesome if the graphics were as clear and crisp as Saint's Row or Crackdown, but Saint's Row and Crackdown don't have nearly as much going on simultaneously as GTA IV. This is Rockstar North's first "real" attempt on next-gen hardware, and I think the next GTA installment will look pretty much exactly the same, but might loose the fuzziness, blurriness factor. At that point, people will start bitching about something else. I will admit that I did alot of posts about the blurriness issue, but it wasn't so much me bitching about it, as it was me trying to convey what I was experiencing initially.
Having played the game more and more, it's really no longer any issue to me whatsoever. I'm playing the game on a 124" screen, and that issue was a bit more magnified because of that, and it's certainly not the first game I would whip out as demo material for my front projection setup. I would most likely use that one level in Uncharted, where you are riding on the SeaDoo thing, and trying to go against the current, up the rapids. That level was just freaking sick. That, or Bioshock or something like that, would be my demo material.
I'm now at the point where I don't really want to think about the graphics in regards to GTA IV. I just want to enjoy what is surely going to go down as one of the 20 or so best games EVER made.