Well, lessee... yes.
There are two types of games I lend: Old stuff that I no longer/rarely play, but remember as a good game, and new stuff. It's a bit more complicated for the latter. Basically, in general, finish the game ASAP so I can pass it on to whoever. If someone was actually looking forward to a game, on the other hand, I will lend it before I play it myself, console included, if necessary. I've also translated a few games in the past, manual and all - just old PC stuff - since most of my friends only speak Japanese.
Having stuff scratched or stepped on? It happens from time to time. Somehow, when it happens, I generally end up apologizing. Simply never having the game returned is waaaaaaay more common, but I don't mind it. Means they're having fun, right? Thankfully, I generally get the consoles back eventually, but I've had a few cases of having to get a new PS2.
So yes, in short, it happens a fair bit. Doesn't bother me, though.