Some FAQs I read recommend playing this on the easiest difficulty setting to get a full appreciation of the story and graphics before stepping up for later playthroughs/

Is there anything to this. Does it actually get so hard that you can't focus on the look and feel of the game itself?

Different people have different experiences. Why don't you start with a high difficulty and then if you can't enjoy the game, lower the difficulty.
Some game mechanics lower the difficulty of combat situations significantly. I'll leave it to you to discover.

XD

Very funny. And I wouldn't call this game an FPS by a long shot.

There are few instances where game can be hard, even on Normal difficulty, but... I would say go on Normal. It's mostly getting used to specific enemy and/or creating a tactic against it. And a bit later in the game it's possible to prolong the fights to the point of stupidity, using 'hit'n'run' fighting style plus Spirit Thief. I think the longest fight was almost over 1 hour on the Arena... but I did it pretty badly, so don't worry about it. Yet. :)

Hey, I'm clearing trying to give you a hard time here. Don't go interjecting reality into this. Seems a missed opportunity with your reply though. I was doing three other things at the time and forgot what I was saying.
Still, the more general point stands, and as everyone else said start with Normal.

I made that reply this morning before I had my coffee. You should be lucky it was in english. :P