Final Fantasy 4 seems to get slapped for the "chibi" characters a lot. Dunno why as the original version on SNES looked even worse chibiness.
As for judging the graphics, Final Fantasy 4's animation is amazing. And inside the game were 3 slightly different engines used to portray the graphics:
1- the field gameplay. This is where you walk around towns, the world, or dungeons. It's pretty basic with just a few animation types like hand waving or basic movement. I've noticed the only major change between the field engine in Final Fantasy 3 and 4 is that 4 now uses 3D models for buildings in towns. In FF3DS, those buildings were just flat sprites without sides. Just a building front.
2- the battles. Square Enix found that the one way to fit more 3D characters on screen at once is to drop the framerate to about 25FPS. In other words, the game moves a little more choppy. The upside is that battles can now hold up to 11 character models at once, considerably more than Final Fantasy 3 DS, which could hold only 7 characters for battles (although it went at 60FPS).
3- the voiced cutscenes. Now HERE is where the game gets REALLY impressive. When a voiced cutscene, character animations receive a HUGE bump. Their faces show incredibly dynamic expressions. Their basic movement becomes varied instead of just basic gestures. And lastly, the lighting was changed to a dynamic form as shadow now appear much more varied.
I've noticed one thing about 3D on the DS- the DS seems to be really good at cell shading. That's what is seen in Dragon Quest Monsters Joker. It actually uses somewhat basic polygonal use and sticks to textures to impress you. I'll agree that some of the game looks amazing, but I'll also say that the 3D animation doesn't hold a candle to FF4's. I did like how the game uses a behind-the-back view as opposed to FF4's overhead view, but can't complain since the original 4 was the same.
BTW, for whoever liked the 3D in FF4, but wish to see what the engine would look like without big-headed characters, I suggest you try out Avalon Code. Avalon Code is made by Matrix, who developed the graphics for FF4DS, and the same graphics engine is used for the game. The difference though is that they even further improved the game engine's animation and made the characters with realistic proportions. And it's an action RPG.