I find some people's stance on video games a bit odd to be honest.
Like the little Timmy scenario. First off, little Timmy should not be playing a game rated M for Mature, like Gears of War, Madworld and the like. So you shouldn't say
"Let's make sure we can turn it off for the kids" because in all honesty, kids should not even be playing these games. I know they do anyways, but if you're looking from a parental standpoint, I would not buy a game for my 7 year old that I knew would show a man's penis get chopped off or some stupid crap like that.
And for ADULTS who buy the games, it should be an option and it is an option in quite a few games. Gears of War has an option to turn off gore. Although I personally prefer the blood because it's easier to tell if I shoot someone.
And I'll agree that gore can be good if used correctly. Gore for gore's sake is ridiculous.