I wouldn't say its purely nostalgia, experience plays a huge role in knowing what you like/dislike.

If i would be new to gaming (like a kid would be) i would obviously also pick the better looking game/system any day (and why wouldn't i i have nothing to base my opinion on but what i see)

As a somewhat stupid analogy its like if 2 people would ask you out on a date but you only know their looks, obviously based on that information alone you will always pick the person who's more attractive to you (doesn't have to mean that it was the best choice in the end though)

Lots of more reason why kids also always gravitate towards the newest things though is peer pressure or toxic social environments generally speaking you don't wanna end up being the loser in your class who is playing the "boring old stuff".

Graphics are important but only to a certain extend (and at first glance), otherwise some of the most popular games in the world wouldn't look so "bad" in terms of graphics, like League of Legends, CS:GO, Minecraft or Among Us.