I agree with Lord J. He said it all very nicely.
Personally, I tend to prefer realism, but I've scarcely found un-realism to work all to well (just my experience; I'm certain it has been achieved.) Moreover, my own skill (or call it flaw, if you will) is to write in realistic fashion - or, perhaps, it just comes from liking history. When I write, the empires are borrowed in fashion from the likes of Greece, Italy, Scythia, Minoans, etc. As such, I focus very much on realism, and find a lack of realsim to be a problem in much fantasy (I've said before that fantasy is not a license to be absurd.) However, that does not mean that the concept of being fantastical cannot be employed... it just has to be treated skilfully.
Actually, you know, this applies to multiple facets of a story, not just technology level. Another one is battles and the like. I think there's a real tendancy there to make battles bigger - the bigger the better - just like there might be to make super-technology. Now, while both of these work in the hands of a skilled writer, in those incapable of doing so, they often falter, and seem ill-placed. Also, there is an annoying trend these days to try and make things 'bigger' - notice all the 'epic' things? How I despise that. To me epic is not measured by the scale of story or battles, but by the style of storytelling. If not fully poetic, it must at least be somewhat formalized. But enough of that rant, the point is, extremes are only good if they're done for a reason, and not just for their own sake. That goes for battle-scale (in a story with battles), range of impact in the stories (ie. world-spanning consequences often turn out cliche), and also technological scale.