I think this shit is a good thing personally and i am a person with a passion for playing music. now instead of acctually bothering to learn an instrument and eventually forming a band to make mind numbing pop/rock music. these kids will just sink there time into this. I guess the illusion is all they really need.
I've seen it happen! some kid i knew used to play bass and aspired to make music like Blink 182 and crap like that. As soon as these games came out, I slowly watched his interest in playing the actual instrument decline to the point where i don't think he touches the thing anymore. chalk one up for good taste.
music and rythem games are never going to replace acctually making music, people aren't going to stop going to see actual live bands because some kids can tickle plastic necks with 5 buttons, and at the very least it isn't going to effect my slice of musical culture, where the music has meaning and the image is an afterthought.