I think the industry is starting to see a backlash from this though... Rock Band downloads have slowed down, and NHL 10 got a severe beating in the press for making equipment available that improved your player through micro-transactions. The result was that within two days of the game coming out there were a bunch of rich assholes with golden skates that could skate 10 km/h faster than you, thus winning every game they played, ruining the online experience for pretty much everyone else.
This will not last long if we keep putting up resistance to it. The music games were one of the first to have real success with the business model, but I think it makes a bit more sense there. Each track has to be licensed and converted to the Rock Band format, which takes time and effort. I wish they were a little cheaper, but if there's a song on there I want badly enough I'll buy it.
But there is no way in hell I will fork out some extra cash just for in-game items. I will sometimes pre-order a game, at the regular price, if it means I get something extra, or get a limited edition version if I like the perks enough, but this nickel and dime stuff will go away soon enough. I don't know many people who've bought stuff for their XBox Live avatars.