Some games can be used to great educational and/or practical effect. A lot of people are under the impression that video games are still essentially what they were 20 years ago...tests of reflexes that rewarded the ability to make your little character jump at the right time, or hit the A and B buttons in the right combination to make him do a super punch. This isn't the case.
Some very educational stuff slipped under my radar and got into my brain. I wouldn't touch anything as obvious as "Reader Rabbit" after I was 6 or 7, but games set in historical contexts sometimes managed to be educational. Play "Civilization 3" or "Rome: Total War" for a few hours and try not to learn something. I've forgotten about the strategy game itself in Civ 3's Civilopedia feature, which gives a little 2-page informational blurbs on all sorts of historical figures, technological advancements, military units, significant events, civilizations, and so in. The real Rome, for example, seems much more interesting after you've been playing as the digital one for a few hours.
Text-based online games are a good way to improve both writing skills and typing speed. Some of them are just timesink roleplaying games about playing 12 hours a day until your elf wizard is level 100, but some are creative and even literary. Elendor, a Tolkien-based MUSH at
www.elendor.net, has helped me improve my writing ability quite significantly. MUDs and such have been around for a while. My parents were caught off guard when my 7th grade keyboarding teacher said I was the quickest in the class, and it wouldn't have happened if I was booted outside every day until I was 13.
I do acknowledge that it can be a serious distraction, and I've seen most of my fellow gamers dodge school and work-related responsibilites for a bit more gaming time. I've done it myself. I've even seen some people get very seriously addicted to those games that can be played for literally days on end without coming to any sort of a conclusion. I've seen people fail out of college playing poker, watching TV, and drinking, too. The argument that games are potentially addictive isn't enough to stop me from playing them any more than it would keep away from a night of cards, a good show, or a couple beers.
I play a bunch of games and I hope if I have any kids I'll be able to enjoy them with the little buggers in the same way that I will playing catch or kicking a soccer ball around.