What's worse; a game that is Too Easy or Too Hard?

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Too hard.

A game that is easy can be boring, but difficulty is only a single aspect of a game and the other attributes (story, writing, visuals, etc) can keep it engaging.

A game that is too hard risks the chance of you bouncing off of it entirely. It might have incredible other aspects to it, but it won't matter because you'll never get to experience them.

The Witcher 3 is a good example of this. It is not a particularly difficult game, even it's harder difficulties skirt more towards tedious than mechanically demanding, but it just knocks everything else out of the park. The gameplay might not challenge you but you don't care because you want to play for everything else.
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