I would be happy still with games that run at 720p60 and having other hardware power going into more complex systems and gameplay mechanics. Is this just me?
I think you've created a choice where none exists based on a false assumption about how performance can be divided up.
You can certainly throw some tasks onto the GPUs (we call them compute tasks and as of this recent generation of GPUs, you can efficiently schedule both rendering and compute tasks at the same time and not get bogged down ensuring that doesn't just lead to an underutilised GPU) and the current consoles have to due to their tablet-scale CPU cores (even with 8 of them, the low clock and small scale means they're not equivalent to desktop CPUs) - this is a necessity that's not unlike the PS3, which had the vector units (SPEs) to offload some tasks from the general purpose CPU. It is not strictly untrue that pushing rendering performance does restrict the other work you can be doing (both as it eats up all GPU resources and can leave the CPU cores spending a significant time pushing those instructions to the GPU each frame). But this weighting of resources operates for all elements of a game, why not give up better physics to make space for the extra systems?
However, in broader terms this like asking if we would be happier if Pixar movies looked much worse but had better stories. Yes, there is obviously a budget involved so spending less on rendering and developing cutting edge rendering techniques for new movies would provide more potential funding for the narrative team but also that's not really something that's actually a choice being made. The team working on the story aren't competing with the CG team but are working together to make a singular work that uses the expertise from both teams.
Simply dropping the resolution, without also firing half the art team and reducing the detail of thew worlds, would not save much (it would save literally no pennies in dev costs and less that you'd think in perf numbers for the GPU - so there would be no extra money for writing new GPU code to make use of any perf space for compute work). Going back to less detailed worlds and so on is possible but could still be done at 1080p30 or 1080p60 without many issues. So focusing on the resolution change is not really where I'd frame the question even if I was going to put this as a competitive rather than a cooperative process of creation (the greater detail in the world for ground foliage generates the stealth mechanics in Uncharted 4 or Assassin's Creed - they work together, not opposing each other).
Most mechanics and systems you see working are the result of one thing: investment in gameplay designers and/or programmers who sketch out (even making systems purely in paper first in some cases) and implement systems, see how they operate with the other systems already in the project, and ensure the code that implements them are not bottlenecking the engine. Wanting more investment in this is normal but also not something you can get to just by demanding the game's resolution be dropped. That's not really how any of this works.
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