Retrieval finds the right passage 70% of the time. Is a better generator or better retrieval worth more?

Usually retrieval. A generator only helps on the questions where it has the passage.

Illustratively, with 90% accuracy given the passage and 20% without: start at 0.69; a 95% generator gives 0.725; 90% retrieval gives 0.83. With perfect retrieval, the generator's accuracy is the ceiling.