Ultimately even though most of you claim that the graphics are fine as they are now (and I agree with you, for the most part), using ASCII graphics is only going to appeal to the core few. It's not mainstream (anymore), so it'll always alienate a lot of games (and potential customers!) because of that.
For it to become "game of the year", super-famous and super-popular (taking it out of donation/freeware grounds and placing it firmly in commercial mainstream (not to say I wouldn't buy it if it was, but I think we can all agree you wouldn't see the average counterstrike player picking it up)), it's going to need good graphics. That's, y'know, a given.
Compare DF to The Sims*. They both vary quite a good deal in some ares (DF is a lot more complex, for instance), but in general they're basically similar concepts. Balance resources, make the right decisions to look after your little people and express your artistic talent in the way you design your house/fortress. Do you honestly think The Sims would have been anywhere near as popular if it was ASCII?
I wonder if there'd be some way of writing a program that could overlay itself on DF's screen and add a less-text based UI. That'd be lovely.
*I've always thought Dwarf Fortress is the perfect merging of Sim City and The Sims, to be honest. Best of both worlds, and no horrid scary clown thing.