I think it's really nice in an 'initial phase' where everything is supposed to be all fine and dandy. It's very pretty and it makes me giddy, but when it comes down to doing the dirty quests and murky deeds a good RPG conveys to the player, then it can significantly detract.
That's something Guild Wars did really well, I think. The bloom made all the areas look really pretty, and it was a marvel to run across a field in search of some NPC who was supposed to teach you how to fight, the sun glinting off of your sword into your eyes... but then you actually had to start fighting monsters, and the sun and beautiful fields, lush jungles and dreamy valleys just don't pull you in like a dank tavern and a murky swamp. They're just a bad setting to fight in. You just want to make love between the flowers and become a farmer.
