Innocuous little phrase, isn’t it?
If one takes a moment to consider it, however, the idea can be taken to it’s logical conclusion: ‘You (or your browser) are incapable of handling the full experience we want to present, so here’s a cut-down version.’
At its core, the mere concept of 'graceful degradation’ belies a lack of respect for one’s users and, more critically, a fundamental misunderstanding of the medium in which we work.
As a community, we coin phrases with nary a thought to deeper connotations these might have. Under scrutiny, the idea of 'graceful degradation’ simply doesn’t align with user-centric design and development.
Progressive enhancement it is, then.