They have improved dramatically in the recent build. Just go to the main page of
www.nkzone.com to see some of the new screenshots.
In previous builds, graphics weren't a priority. Real-world physics took priority over eye-candy. But now it's a bit more mature, a few more people have been able to contribute nicer looking graphics. Some of the Modena 360 skins for example are just stunning!
There's lots of people playing it that are GPL'ers as well. The net-code is still a little buggy, but the programmers are learning and fixing things daily. It's only been a couple of months since 0.96 was released, and the game has doubled in playability and graphical niceness in that time..