I was reading the latest issue (vol 2, iss 2) of Retro Gamer magazine, and they had a big expose on the 7800, including an interview with one of the guys who designed the machine. He said that graphically, the 7800 was better than the NES, yet not as good as the SMS. Maybe I just haven't been looking at the right games, but I have never seen the 7800 display the kind of sprites that the NES is capable of.
Case in point- score display. The score display on 7800 arcade conversions is laughable. While miles ahead of the VCS, the numbers are big and blocky, not at all like the polished rounded numbers found on NES arcade conversions.
Anybody want to prove me wrong on this one?