There are a few reasons for this, the main one being because it isn't considered as violent/scary to todays standards/audiences.
Make up. Arnold's face does look a little plastic as the movie goes on. This is due to make up, which wasn't fully perfected than make up today. It could also be because Arnold's head was replaces by a 'robotic' head which was made to look like Arnold, to help with the effect of the Terminator taking it's eye out.
Arnold was standing behind, using his hands to operate the tasks carried out by the Terminator. If you have the DVD you can see this in the special features.
I strongly believe that it's not just "the one" that started off the Terminator saga but "the one" that started off a whole load of imitators.
Think about it, The Matrix, I, Robot, mebbies even Universal Soldier to an extent (bad example I know but a third movie doesn't come to mind). The Terminator spawned a bunch of movies where the plot line involved Robots trying to overthrow mankind.
Thing about The Terminator is that it's a little different from other movies in that the master computer (SkyNet) tries to fight its battle in the past.
I totally agree. Don't get me wrong, I thought the 1st Matrix movie rocked. But to me it was just like Terminator. AI using humans, or trying to enslave them. Cept Terminator is about killing all of em once SkyNet has used humans for what it wants!
But yeah, basically us against them (the machines).
Also, Matrix, as good as the effects are, was made in such a different time. Terminator, with what was available at the time looked OK'ish, and not as bad as what it could have back in them days.