You should not beat shaders down so much. You dont need PS 3.0 for making good visuals. The problem with very flat and bad lighted models in 3dgs can only be solved with shadowmapping or gpu lighting. Even the fixed function pipeline can render bump mapping, faked reflection through an environment cube map and other nice effects like cartoon rendering, lava and such.

There is really no excuse to not use such techniques. No talking about gameplay, old graphic cards ore whatever. You all can use it. Get you a copy of SMEE2.0 or just look into the WIKI. Every card can render the old stuff and it will improve lighting very much.

Why should a game look bad, only because it was made by a small team or one person? While we are talking here you could even have achieved it through just checking it out.

Otherwise it is better to stick to 2d-games. But even then you need fantastic graphics to compete with every standard casual game out there. Casual games are no excuse for bad graphics anymore. They look appealing, have a good mood and sell so good, that some companies made Millions with it.