In general, AI graphics are frowned upon because AI is trained in real artists' works. So it's like "I want my game to have hot anime girls without actually hiring an artist that knows how to draw anime girls", it's seen as lazy and profitting from the past efforts of real artists. Not to mention that all games that use AI graphics end up looking the same (and might have noticeable issues like wrong number of fingers or even worse, graphics that don't match the scene at all).
That's at least what I've seen as a general opinion for characters or sex scenes. Backgrounds and such made with AI aren't as criticized.
My personal opinion is that original artwork will always get more praise because it involves a lot of time and effort. Even if it's not perfect, just making it moderately attractive would earn points because the game creator didn't take the easy way out. Now, I can tolerate AI graphics in games if they're either edited or have enough effort put in to fit the game.
If you slap an AI CG on the screen and then have the entire scene use the same image, that loses points in my book; if the CG changes but it's merely an expression change or just losing clothes, then that's kind of lazy too (I think all that takes is changing the prompt while keeping the seed?)
Edit: I might as well add that beyond the AI CG, what I absolutely loathe in games is AI generated scripts or dialogues. AI has a very cringe and repetitive way to speak and/or describe erotic scenes: "Well, well, look who's here? It seems you're having a.... problem. Want help with that?", or "She arches her breasts into your hand, seeking more contact", "she wraps her fingers around the shaft and uses her thumb to rub the bead of precum leaking from the tip", etc.
Any game that has phrasing like that gets a thumbs down from me because it's not sexy at all.