DAO has better graphics in my opinion, but D2 graphics aren't so bad that it ruines the experience for me. When I play a game, the graphics do have to be above a certain threshold for me to enjoy it. But as long as it's above that threshold, whether or not it's better or worse than other games really doesn't bother me as much.
D2 and DAO are both well above threshold for me. But right now I'm enjoying D2 way more than DAO because it's much less linear and has true 3 dimensional freedom of movement. In my opinion, that more than makes up for the graphics.
Edit: also the armor in DAO is some of the ugliest I've seen.
