I think I have to agree with broozer, although I don´t think that it is the terrain to blame but the developers and/or publishers, the gamers that don´t seem to care and I think the most important is the time which somehow never stops, at least not during the last 100 years (with the exception which can be seen on the gs wiki).
Games which do have some great leveldesign but no real terrains are in my opinion "beyond good and evil" and "half life 2". Both do have outdoorlevels which aren´t blocky, but they aren´t very complex and not very big. But I think that those games do show that it could be possible to have great level design even with terrain.