I think "cartoonish" is always the best way to go... when you start to "try" and look more and more realistic, it just fails and looks flawed. The human eye picks up on these flaws immediately, and it just makes the graphics look more unnatural.
For example, Blizzard Entertainment usually keeps their games somewhat cartoonish, and it makes them look fantastic. Things can look more dramatic and have more personality than realistic graphics.
Just take a look at some good comic book art.
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The point isn't to make it completely naturalistic, pushing as much detail in as possible, it will always be necessary to abstract representations, but to make it serious instead of goofy, 'cartoonish' meaning made to look made goofy or fun.
I think the unit, city, etc graphics in Civ3 were a nice look, for instance, although new graphic capabilities may allow them to be made better. The graphics in Civ4 surely has created more of a feel of dimension, but its also has less of a historical feeling.
The most atmospheric game Firaxis has created is Alpha Centauri, and they made that so strong by keeping things serious, but interesting and involving. As much as there are nice and welcome changes in Civ4 i also think Civ3 had a better feel to it. Overall I think it needs to be stronger than in either of them.
Also things like relief sculptures in Age of Empires depending on the civ, and backgrounds in Imperialism add to the feel, although I think Civilization should do it more minimally than in Imperialism.
I think we should get rid of the leader heads or at least find a way to make them appropriate. I know people would miss the idea of these richly created 3d models, but I don't think they add to the game, but at the same time add a little tackiness.
Btw, these are some of the most artfully drawn comics ever:
Jimmy Corrigan, The Smartest Kid on Earth
http://www.randomhouse.com/pantheon/graphicnovels/art/jimmyspread2.jpg
http://www.common-place.org/vol-01/no-03/reviews/images/ware01.jpg
http://www.826valencia.org/store/img/prints/print_ware.jpg
Little Nemo in Slumberland
http://upload.wikimedia.org/wikiped...bed.jpg/464px-Little_nemo_the_walking_bed.jpg
http://twi-ny.com/masters1.jpg