Many companies do this. Blizzard is notorious for using this model to appeal to a wider audience. They even have massive number of fans who will go out of their way to call their graphics superior. I don't mind the artistic style they take most of the time, but their graphics are technically low most of the time and in my opinion run horribly for what they are. SC2 and D3 both run like garbage even with high end hardware. What's worse is that the difference between low, medium, and high is often very insignificant visually, but can result in drastic drops in performance.Actually most of the time it is the small developers who are pushing the limits of graphic cards.
Crytek with Far Cry and Crysis
RED Project with Witcher 2
4A with Metro 2033
It seems to me that large companies have to cater to their stockholder's need instead of their fanbase. I.e. lower graphical detail = lower system requirements = their games will be playable by more people = more profit with less risk