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How true do you think that statement is? While obviously, in a lot of cases you get what you pay for, but can you recall any dirt-cheap or even free games made by small developers or fans that you thought was absolutely amazing?
Graphically behind a lot but free to play and a absolute blast with friends. Unique FPS/TPS gamemode and has some minigames in some maps which makes it even more fun.
So to go on topic, this statement can be very true, but it can also be wrong.
There are a couple games that are both really good and free: the original Cavestory, Battle for Wesnoth, Dwarf Fortress and a lot of RPG-Maker games that where made with versions prior to RPG-Maker XP. Even later RPG-Maker versions most likely have some really good games, but I've never felt the need to look for any.
I once bought SpaceChem with $1 from a gaming summer sale. The game is well-made, with an even better soundtrack, though the game can frustratingly challenge your chemistry logic and problem-solving skills.