I'd say characters are more important than story.
I wholeheartedly agree with you. If the characters are deep, well-crafted, believable and drive the story in an erotic and sensual way, that's what works a lot better for me than the story or even porn.
A great example for me is "Man of the House", the plot really is filter-thin, but the characters are so intriguing, that I keep on playing, just to see how they're written, and how they'll react.
Besides characters, story and porn, I would like to offer a 4th element, and that's sensuality. What I mean with that is the erotic situations and plots the game describes. A father with his daughters, that's all good and well, but the way that some games really create those very intense, incredibly erotic situations with just the right kind of language, can be so powerful. I've enjoyed certain games thoroughly with porn scenes that are finished in 5 seconds, with a story that makes your eyes roll, but the highly erotic situations (with the right kind of pervy use of p, language) just makes it intense. I guess you could categorise it as porn, but I do see it apart from what others have been describing here.
Such a Sharp Pain is an excellent example (but then everything just clicks in that game, characters, story, sensuality and porn)