I had a no-games consoles rule when ds1 was younger. He was given his first DS when he was 9 and I was a bit cross about it but let it go. Since then he has been allowed more gadgets and now, at 16, is the owner of a Wii, an xBox, an iPod touch, an iPad (which he bought himself) and the ubiquitous laptop.
There have been times when I have been slightly concerned about his xBox use and indeed have banned its use for periods of time, but on the whole he has self-regulated.
Now his xBox live membership has run out and the xBox has the scary red ring of death and he isn't bothered about replacing either, because he has GCSEs now and is 'too busy revising' to want to play on it.
He also plays tennis regularly, is doing the DofE scheme, volunteers at a charity shop every week, plays with his brother often and is generally a lovely, well-rounded individual.
Ds2 (4) has an Innotab and the camera, but plays with them mostly on long journeys.
I understand the concerns over games consoles- I had them myself. But we are strong believers in teaching self-regulation and self-motivation and thus far it appears to have worked. Obviously this might not work with everyone's children, but for us it has served us well.