Gamespot at GDC got some info on why Zelda: Twilight Princess looks so different from earlier Zelda titles:|
The company found that Wind Waker's cartoon-like graphics were alienating the lucrative teen audience in North America, who would look games of that style and think they were for kids, he continued. With the Japanese market in the midst of the dreaded "gamer drift," and the North American market much stronger, Nintendo decided to give the US what it wanted--a realistic Zelda. He said, "We had to make a game that met expectations of fans in North America. If it didn't, it could mean the end of the franchise."
The decision was also made for Link to have the ability to turn into a wolf. "This kind of disruptive breakthrough was just what we needed for the staff to change their way of thinking."