I think it's a bit weird, games by their nature just aren't good story tellers in the traditional sense (see movies based on games and games based on movies). The best way to tell a story in a game is with atmosphere.
If you take a game like Chronicles of Riddick: Escape from Butcher Bay, what you have is something that would make for a great game story if it wasn't for the frickin story >:( The opening sequence when you're being walked into Butcher Bay by the guard (as the intro credits roll) you get the feeling of a how a story can be told brilliantly in a way that simply can't be done with movies or books.
Here's a clip of the intro video, you do have control over yourself to look around, but the guards are controlling where you walk (prisoner, obviously)
http://www.youtube.com/watch?v=58vU8R0sPVU
The thing is there's no exposition, there's no cutscene. To me it stands as one of the most brilliant story telling elements in a game ever. You get a feeling immediately of the atmosphere and it stands as a nice demonstration of how a game can tell a story in a unique way. Granted the dialogue could use some work (not the voice acting, it's great in that game), but the method it is delivered gives a feeling of this prison and its inmates and guards just crushing you under its oppressive weight.
It's not like a movie or a book, from a the perspective of fully utilizing the medium eventually they'll come to the understanding that a game, by virtue of its interactive nature, is fundamentally different.
Books can have deep, rich stories and details because of the nature of it. Great movies are not ones based on books, they're ones that understand they're dealing with a primarily visual medium with audio as a supporting tool. Hence great movies tell their stories visually, letting music set the mood and express their purpose via its strengths rather than exposition. Star Wars, Glengarry Glen Ross (yes a play, I know), Lord of the Rings (yes a book, I know), Schindler's List, and pretty much any great movie you can think of are great because they understand the confines and strengths of the medium.
Games just aren't at the point of understanding yet that they're an interactive medium. Exposition generally feels cheesy (at least to me) for this reason. The original Half Life is great in that you get no cut scenes or exposition, the story is told right there as you're looking at it, and you have to piece it together or extract the information for yourself based on your observations and assessment of the situation.
As gaming becomes more and more popular I imagine this general approach will gain in popularity.
Edit: Lord of the Rings stands out as a rule against the norm, as does the Chronicles of Riddick game mostly because the both distance themselves from their parent medium. IE good because of what they are, not where they come from.