Graceful degradation means that a website is made with respect to older browsers, so they can show it. It does not mean that the site must have a fancy design when an old browser is used, and the fancy features like menues may be replaced by a lot of links in the top of the page.
What is important is that the site is useable using an older browser - not that it is pretty or as easy to use compared to a newer browser.

This picture displays the front page in Netscape Navigator 3. It is not pretty and it shows the danish letters æ, ø and å wrong, but the site is useable.
It is probably only a small fraction of the visitors which will ever use graceful degradation, but it damands an equally small portion of work to make it, if you use your head a bit. At the same time the chances are increesed that a browser you do not know can see the page.
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