Men in video games are most often portrayed in the light that women would find them attractive, and men would find them 'awesome' (just another word for male-male attraction.)
Women portrayed in video games are of like mind. Bigger breasts are more attractive, this is evolution. Bigger Breasts = Greater Fertility = More Babies = Men Want.
Video Games are also, for the most part, about fantasy. Running and gunning down Flood and Covenant isn't something we do in real life, but we enjoy doing it in Halo because its fulfilling a fantasy and it's fun to do. The focus on a game is to make it enjoyable. Since (likely, I don't really want to google statistics for this) most men enjoy larger breasts, larger breasts improve the enjoyability of games. Just because this isn't the case for some people, doesn't mean it isn't the case for the overwhelming majority. Even characters like Nova/Kerrigan from StarCraft have abnormally perfect breasts, and tight bodies that are extremely flattering. A game that has very little focus on the individual characters and more on the whole scope. Do you think Kerrigan would be a more identifiable character if she had all the traits considered negative by the viewing public? Just because she is more in-line with the statistically average "Realistic" woman? Average weight, unstyled brown hair, possibly a bit of upper lip hair and a much less refined and non-seductive ass wiggle when she walks.
I agree that imperfect characters make better characters in any Story based medium (Books, Movies, Games, etc.) but physically imperfect characters are not always the way to go about it. Yes, Alyx (Half-Life 2) is a great character. She is much more plain, much more boring than the typical female character. She is imperfect in many ways other than her average-below average breast size. But do you not think her tight jeans, adorable freckles, and interesting hairstyle were choices made by the artist/designer to compensate for her otherwise drab appearance. It wasn't an available choice for them to make her an over-the-top sex icon, because the Half-Life world is gritty, chaotic, and drab. The characters need to be, too. Gordon Freeman isn't your typical male character, either.
The Sims is an example of the player being in control of how their characters work, and I have never seen someone make a flawed, average looking character in The Sims 3, because the options just aren't there to do it. Yeah, you can make your character fatter, and shorter, or thinner, and taller, but you can't make them overly obese, you can't make them anorexic. You can't give them bad teeth, a lisp, or any level of deformity. The artists and developers specifically left that out, because it wouldn't be used; and if it were to be used it would be out of irony and interest in how ugly you could make a character.
I've lost where I was going with this...
It's unrealistic because it should be unrealistic. Characters in video-games are Above Average individuals, that is the point.
However, there's a level about 10-12 levels later where you have to assassinate a guy in a hot tub with a couple hookers. The guy happens to be Asian. My wife is Asian, too. In the course of scouting again, she caught the guy fully nude, and she was *OUTRAGED* (though again, humorously) that he was ....umm.....not very well endowed at all. She jokingly ranted, "Even video games are stereotyped that Asians have little pee-pees!" This was PC, not sure if the console version had this.