It can't be destroying it, can it? I mean, it's as immersive as it was last generation, at least. Saying that the Wii is as immersive as the PS2 doesn't make it "destroy immersive gameplay," although you could say it's not progressing it.
And even that comment, I would argue. Look at the hub bub over Manhunt 2: the Wii version was much more aggressively attacked precisely because it was too immersive.
i disagree video games are a form of art. A game being to immersive is like saying the monalisa is an incomplete painting. Censorship in this world has just become to stupid and strict on the media but doesnt restrict people like the idiots at the westboro church from "thanking god for dead soldiers" and protesting soldier's funerals. Oh, there is actually a story in ManHunt 2.
As for your pro gamer friends, I'm a former pro in Unreal Tournament 2004, for PC games we care about fast framerates with no lag, we will turn our games to low graphical settings and 800 by 600 resolution. For consoles we should have to suffer from lag, and framerate issues so graphics should be able to free to create wonderful worlds displaying each developer's own art styles.