Actually the character models are insanely detailed as well. Superhigh polycounts and razor sharp textures on all of them. Lots of cool physics with the hair and clothes especially.
This game is a perfect example of diminishing returns.
The artstyle was adequately represented with the number of polys and texture res and lighting techniques used for the last couple of games.
It's like trying to do Wind Waker on next gen consoles...it's not going to look much better, if Nintendo wanted to keep with the exact same looking characters. Sure, the background could be enhanced, but the characters will look the same for the most part.
Heck, even with billions of polygons, Tecmo has chosen to keep the same look in their CG art.
I don't think it matches the CG yet, and they have admitted that they were working on the visuals, but it's not that far off from a technical POV.