As a kids game (assuming that's what it is), this looks pretty good to me (my nearly-4-year-old daughter will probably find it adorable .
The main problem I see with the graphics are that the backgrounds are rendered with a photo-realistic 3D appearance, but the characters are all rendered with a black outline (like in a cartoon), and pretty much flat (that is, with no depth).
They probably did that to make the characters stand out on the backgrounds (which are probably pre-rendered).
This used to be fairly common practice, mainly because the hardware couldn't render good looking backgrounds in real time (I remember playing one of the Final Fantasy games on PlayStation 1 that looked exactly like this, although the art style was more Anime, and less Weeble . It can also be a lot quicker to develop (fixed camera angles and pre-rendered art work is easy).
Since this isn't finished yet, they may still be working on making this look a bit better (say, thinning down the outlines, and making them match the backgrounds better, possibly blending them into the background so the transitions aren't quite so harsh).
Or, maybe this is the look they want
I find it a bit jarring, as is, but, once again, if it is for kids, they won't notice the subtleties like us old jaded gamers will. I've worked on games and edutainment for kids...they really don't care that much until they hit the 10-13 year old range. They may be maturing a bit faster these days, but I still can't see anyone under the age of 9 being unhappy with the graphics from a technical standpoint.