Realism in games can help to connect to the game setting but whenever i see a game trying to be realistic it seems as thou the only thing that actually means is better graphics. All the realistic graphics in the world wont give a game more immersion if you need to shoot a rat 20 times before the thing dies.

A lot of game developers associate realism with graphics but personally i think realism in games should be more about the dynamics of game play. For example, i quite like space games but I’m not particularly fond of such games if they use the ever so popular “turn on a dime” physics system whereby a ship can instantly change its direction. Lets not even consider the fact that most ships designs have a crap load of engines to push ships forward and then just slow down or stop when you turn off the engine.
Odd thing is the Newtonian flight models are actually more fun to play (i think so anyway) and not that much more difficult to get used too.

Point being.

Realism… there should be enough to make you believe the world but it should be focused on the game mechanics. Players wont necessarily notice that the realism is there but it works to establish the setting.