I agree that KOF XIII might be the best looking 2D-fighter ever, but the style has bothered me since I first saw the new sprites in XII (I'd even argue that XII looks better than XIII).
Some characters look absolutely fantastic. In general, slim characters look argauably better in XIII than in the past, but more muscular characters look weird. Ralf and Clark are probably the worst examples of buffing up, Terry looks weird (and doesn't feel like Terry), Andy also took some steroids and whatever happened to Takuma. I also have to point out characters like Joe and Hwa Jai, who look like anorectic muscular people. Also their six packs look weird, same with Shen.
How about those slim characters? Kula looks better, Ash is fantastic (and elegant), K' looks more cocky (at the cost of personality, when looking at pre-battle dialogues...), Elisabeth looks better than in XI (but she plays better in XI) and Leona is better than ever (good that they changed the outfit, that old one was hideous).
Apparently art direction was handled by Nona. He is bit of hit and miss. Sometimes he draws something that I comes to mind first when I think some character (Wild Iori in SVC Chaos) and ending artwork in XI can be weird, but it's actually good (Ralf and Clark actually look old

).
I'm one hell of a XI fanboy. I like the character artwork (in my mind best in the series) and in-game artwork is good (they look like characters are having fun). Backgrounds might lifeless at first, but they're actually good looking.
The Fluke mentioned Darkstalkers. I actually started thinking one thing. I think SVC Chaos Demitri looks much better than the Darkstalkers Demitri. I wondred if Darkstalkers was handled by SNK back in the day and in-game style would've been KOF-styled, it probably would've looked damn fantastic.