I don't oppose the term "casual" in all circumstances, but would like the meaning refined a bit.
The way I see it, casual gamers are the demographic that joined during the shift from the SNES to the PS1 generation. This is not to say that all the casuals joined in that period, but that the types of people who fit in this category started appearing in that period. I'm sure we all know them: the uncle that loves racing games, the girl who loves Final Fantasy, the fratboy that plays Halo on the weekends, all who might otherwise thinks games are for nerds (or be respectfully uninterested, but that's rare ^^).
The people we have getting into gaming with the Wii and DS are a completely different breed, and although quite a few of them will probably be "leveling up", labeling them as casuals doesn't work very well, and seems to me more like an attempt to disrespect the newcomers than a meaningful distincton. It also groups people who I think are casual as hardcore with me, and I'm way more hardcore than those guys! Saying some guy who plays two different shooters three hours a week is the same as me? Outrageous! >_<
tl;dr: instead of hardcore/casual we should have hardcore/casual/something