Fraq was made in 2005 and it looks worse than quake 3, wich was made 6 years early (addmitedly by a big studio instead of jut one person, but the point still stands). It is possible to make games in Haskell, but it's closer to a theorical exercise than it is to an aproach to proffesional game-making.
addmitedly by a big studio instead of jut one person, but the point still stands
The point doesn't really stand, no. A big studio making a game over a long time period will obviously do a much better job than an undergraduate writing his thesis (yes, Frag was an undergrad thesis project).
To be fair, I think there are legitimate difficulties making games in Haskell, primarily related to the predictability of performance. GHC is a complicated and rather ingenious compiler incorporating many optimizations. While this is useful, it also means that performance (especially the responsiveness of the GC) can be unpredictable. Predictability of performance is quite important for games. In fact, this could be a good reason to try writing games in Ocaml.
The more probable reason is simply that the set of people working on big-budget games with the expertise to do in Haskell what they've learned to do in C++ is small.