The Economist.com has a great article on the whole "video games are bad for our youths" debate. And for once we have an article which treats this political issue in a statistical and social science fashion.
In the end, it becomes a generational gap between the 'have played games' camp, and the 'haven't played games so they must be bad for you' camp.
A must read for anyone interested in this debate.
I myself, can't wait to sit down with my kids (when I have some) and play a good game, be it video, board, rpg or tag football. Knowing your kids is knowing what they enjoy. And that includes video games.