Many people seem to forget that the o2 was on par with the 2600 the first 2 years. Games on the 2600 didn't look that more better then the o2 games did. But after these first years, and after the massive support of third party developers things took of on the 2600 side. Resulting in better looking games, because of better programming.
I think that if the o2 had had the same support form other developers, it to would have had better looking games, just look at the graphics of revival studio games to see what the o2 is capable of.