Part of designing a site using web standards involves the use of semantically correct code. To quote "Brainstorms and Raves":
"Good HTML structure is based on logic, order, and using semantically correct markup. If you have a heading use the heading element, beginning with the H1 element. If you have a paragraph, use a paragraph element. If you have a list, use a list item element."
At a structural level, site navigation is simply a list of links to other areas of the site. Therefore, the best method for marking up site navigation is (arguably) to use a list element.
If you use good HTML structure, then text-based browsers, screen readers, non-CSS supporting browser, browsers with CSS turned off and search bots will be able to access your content more easily.
The answer is absolutely not! Once you have a page with good HTML structure, you can use CSS to create all the visual effects you want. As this site shows, a simple list can be transformed into just about anything with Cascading Style Sheets (CSS).