I wouldn't go so far as to say it's ugly but it's definitely mediocre. Nintendo could do much, much better.
I get that the "New" series is disgustingly lucrative for Nintendo (both the DS and Wii version are nearing 30 million units iirc. SMB3 did 18 mil and SMW did 20, just for comparison), but they could have just keep the "New" moniker but create brand new assets, and change the physics while they're at it, and I doubt the average casual Mario fan would give a shit.