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The stories need to serve the game.
Back in the day, outside of the arcade scene, adventure games were huge at one point, with Sierra dominating with their King's Quest series, Hero's Quest, Police Quest, Leisure Suit Larry, Space Quest, Laura Bow, Manhunter, Gabriel Knight, etc. Lucasarts had their own with Monkey Island, Zak Macracken, Day of the Tentacle, etc. And Infocom with their Zork Series and every other parser driven game they created.
Back when visuals were crappy, designers needed to make games with great stories to engage the mind, which could arguably provide the best graphics out there. As technology improved, the shift moved away from stories and more about visuals.
Will Wright said it best, "Back then, it was about 20% visuals and 80% mind, nowadays, it's 80% visuals and 20% mind." (paraphrase)
Arcade games necessarily had lackluster storylines, simply because of the niche they operated in. Rarely do people have time for a narrative in the span of a few minutes, which is what the average player does at an arcade.
The evolution of technology and gamespace affects how much narrative is focused on these days. We've gone from text-based games to graphically intensive games to online games. MMORPGs have questionable narrative content, but that's because it's hard to tell a story to thousands of people simultaneously in a medium where you don't control every aspect of the storytelling, a la movies. Instead, events are created and story is communicated in that fashion.
I agree that gameplay is still paramount, and that some designers would do well to remember that. Stories serve the game. If the game succeeds with a storyline like, "The president has been kidnapped," then so much the better. But it's definitely a measure of what type of game that determines the importance of story in it.
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