What annoys me the most, is how game companies complain about used games sales, and are trying to prevent it with DRM and one time use codes. They just can't quite seem to get that it is legal for people to resell their games, and that if they made better games in the first place people wouldn't sell them. I think used game sales are the reason why we are plagued with draconian DRM nowadays.

The problem with the gaming industry is that wants the big cash, but doesn't really seem to really know how to get it.
They try to attach big brand names to their games, but have them produced by small coders to cut costs. Resulting in big duds.
They want movie tie-ins, but they have to be released along with the movie to even get sold, resulting in half-finished crappy games.
They use demographics, please all types of gamers but end up with something that looks like the other 100 releases aimed at the same groups.
The only thing they currently seem to pull of successfully are long running franchises, but people will get bored of them as well in time.
Also lest not forget, the game industry does not only have to make sure that it keeps it employees happy and paid, there are now also shareholders who want their part and they don't care about the games, they only care about the cash and the guarantee that they'll get even more in the next quarter.

In my opinion, I'm increasingly frustrated by the lack of originality. How many times can they make the game where *character A runs thru *war-torn city B to save *character C, yadda yadda yadda. Luckily there are original games that come thru and shake it up. Like LIttle Big Planet...which I am loving right now.

Agree completely! I get really annoyed when I read interviews like the recent one with the head of Activision talking about how they have zero interest in any property they can't milk for 17,000 sequels. I understand you're a commercial enterprise and need to make a profit, but creativity isn't your enemy!

Come to think of it. Its kinda annoying that if you are a 2d fan you have to either play old games or get portable system and play on a micro screen. Would have loved to played the last few castlevanias, non-3d metroids or even ultimate ghost and goblins on a normal console/full screen.

Several things bother me, but two stand out in particular right now:
1) The constant graphical revolutions
2) PC-Console and Console-Console fanboyism
This has already been addressed, but it deserves another go-round ^_^ I'm not opposed to good graphics, nor am I suggesting that the latest graphical powerhouses are all lacking in substance. Basically, I don't have money to constantly upgrade my computer. The one I'm running now was just a touch below top-of-the-line in 2004, and I am now effectively debarred from playing any big-budget title that has been made since 2007.
In one sense, it's been a blessing, as I've gone through and replayed some old classics (I just beat System Shock 2 for the first time, and now I'm in the middle of Deus Ex -- that game almost prescient, given it was made before September 11).
However, some really great games have come out since then, and unless I want to spend $500 for the new graphics card, processor, and hard drive to get my system up to even 2006-standards, I'm cut off. Quite frankly, Half-Life 2 had gorgeous graphics, and though it may not boast the lastest bump-normal-hyper-matic-greased-lightning-mapping, it runs well on most systems and, if I understand correctly, is extremely workable. As has been said, if developers just licensed Source, they could use the remaining time and funds on content, or just save money for business' sake.
The second point, fanboyism, is just a big nuisance. I only own a PC and a Wii, but it's not because I think X-Box or PS3 are terrible, but again, I am a grad student and not wealthy. I personally don't think I would enjoy an FPS on a console as much as on the PC, mostly because I remember how awkward Goldeneye was to control on the N64; however, I'm not opposed to them or the system. The 360 has many games that sounds fun (Dead Rising...), but for me, money is a major factor.
However, there are people out there who act as though the success or failure of their platform of choice is of the greatest urgency to them, as though they helped in its creation; people crying out that the Wii is just for the kiddies, or that PC's are dying, or that consoles are for people without attention the attention span to devote to "real gaming," and so on. It's absurd. Each platform has what it's best at, and where it falters: Platform-gaming (like Mario) is still better on consoles, given the greater control allowed by the analog sticks, and the hardware stability ensures that any purchase is not going to be hopelessly buggy; meanwhile, the mouse-and-keyboard make FPS, RTS, and adventure gaming a joy to play in comparison.
Just some thoughts. Overall, I'm happy with the direction games are going. Download services are giving exposure to tons of independent developers, while the huge profitability of games is giving us titles that can take a few more risks (I'm thinking of Mirror's Edge), without developer fears of bankruptcy if it doesn't succeed (I'm thinking of Looking Glass and Black Isle).

Their business model relies on only selling a game for 6 months. Unlike movies, music, books, etc.. which are still viable products decades after they were released. This means that their prices are two high, and people turn to 2nd hand sales and piracy.
Hopefully GOG, Steam, Nintendo Virtual Console, Live arcade etc.. are going some way towards fixing that.. maybe.
Also, needing a top range PC for every new game, and fanboys.

There were some older games that could do it, but todays games just doesn't seem to have knack for it. They had intriguing story, wonderful gameplay, excellent characters and maybe even beautiful graphics (at least for that time). I'm talking about games like Thief 1 or Fallouts 1 and 2 or Final Fantasies. The list goes on, and I think everyone here can name some games that should be included here.
Games can and should be used as an artform. Games can achieve things as artform that movies, series or books cannot because they are interactive, and that should be used as an advantage. Many game devs nowadays make games for people who want to meet other people while doing fun things (MMORPGs) or for people who want to test and increase their skills as players (fps or rts) and I see this as a problem. The combination of picture, sound and interactivity is hard to achieve in any other format than gaming.
I admit, some games try to offer us a good story but gameplay and graphics are usually the main attractions. Fallout 3 had a good try, but the story was very predictable and short. Final Fantasies stories and characters seem to copy the succesful ingredients and mixtures from previous parts nowadays. Again, everyone has more examples of this phenomenom, where other things than story is the main serve when it should be the other way.
Well, I'm just babbling here, probably if I would develop games they wouldn't sell good. At least I could make better entertainment than TV or books are.
EDIT: And yeah, everyone here seems to be complaining about protection on games or their huge cost. I wouldn't mind any protection or even bigger cost if the game would be better than average.

What has been getting to me lately is how almost all of the good development studios have either gone bust or have been assimilated Borg-like by EA and other conglomerates.
Interplay = dead
Looking Glass = rigor mortis has come and gone.
Microprose = can't find the grave because they died a while back.
Black Isle = see Interplay
Bioware = already assimilitated
and on and on.
While the games made by these companies were good games(and yes I realize that the term "good" implies opinion and all that having an opinion entails...) these companies still failed. Maybe it was simple supply and demand but I still wish to know what the real reason some of these developers went under. Any ideas????

Interplay dead ? I don't think so, sir.

1) DRM
2) limited installs/activations
3) over priced games
4) lack of Asian games on the PC (I'm not talk about MMOs)
5)MMORPGs. Yes they suck BIG TIME.
6) EA

That's due in large part to market saturation. EVERYONE has PCs now. Even their dog has a PC.
Consoles are just DRM. A few years ago they were actually cheaper than PCs and thus a good deal for those without much money. These days you might as well buy the PC because you can actually use it for work and life. Waiting for price drops doesn't help much because by the time the console reaches the price they were in the 80s and 90s, you can't find the games.
Gaming will never last in popularity with big businesses because making a game worth playing involves risk. Formulas will not cut it. Most big businesses have burned out whatever formulas made them successful.
I still wonder how long it will take for a company to design a game like Spore and do it RIGHT. Heck, where are the Sims clones for that matter? I won't be buying another @#$@ shooter or strategy game for a long, long time.

Abowen - sorry, I meant PCGAME sales down 60% not PC's.

I smell a necromancer in the midst.....