The only real problem with the graphics (assuming you are referring to the ASCII) is that it makes it hard to see that's going on and contributes to the steep learning curve. Apart from that, it's not so bad, and it also allows the developer to add features to the game without worrying too much about their graphical representation. For example, creatures in the games can have individual body parts/organs destroyed/hacked off. Having to represent these effects on e.g. a model would be a lot of extra effort.
This game is good if you make it over the mountain of learning how to play. The first time I started I was confused as hell, I didn't even know what I was looking at. If you want to get into it, make sure to always keep their wiki up, and make sure you always have booze! (also make sure to start with some bonuses in fishing, the easiest way of getting food early, and woodcutting, lumber being the only building material early on beside building underground) The game uses incredibly simplistic graphics for the reason theDamian explained. If you took the complexities of this game and added 7th gen graphics, or hell, 5th gen graphics, you would get something no one could ever develop for free. Of course, it isn't about the visuals, it's about successfully building your dwarf empire and becoming extraordinarily wealthy.
Once you get the hang of it, you'll find it hard to get away from playing.
Ghan has said he has fixed this. Monovertex please confirm this fix. This was only a problem with people that had signatures in the upper levels like not the special members but the respected members.