1. XNA approval: huh, how can one not be cynical here? The more nobodies within that community, the less ties, thusly the less corrupted it will be.
2. Sims Carnival? OK, people made their own games. Instances of Space Invader, sometimes with pretty graphics, which were artsy. It's OK, it may reveal a few talents, and generate a load of passable content. I hope there's a good rating system in place, to easily find the best.
As for the final question, I think that from time to time, you may get a Blair Witch, but the vast bulk of the population will sit in the theaters for the loud bangs and flashy effects. There's always a middle ground here, and I'm not trying to sound as more numbers = better, because that would be folly. Nor am I saying that the more devs the better.
But you can't always find a Portal. Sure, the industry may have not paid enough attention to small productions, so we may see a few more similar stories in the future, but, man... Shadow of the Colossus, God of War II, developped by ten people and delivered in time?
It's not like Portal makes the next gen consoles sweat. Oh, you could ask, do we need such powerful consoles? Hell, it's a wee bit late to ask yourself this, because they're there, and the train ain't slowin' down.
Of course, this is a kind of absurd paradox. Why make even greater powerhouses if the number of groups which can exploit them becomes smaller?
That's probably where EA, Activision, Ubisoft are our saviors... huh. One can only hope these powers change their bad habits.
Now, sorry for raining on your parade, but making a decent game requires talent and a huge amount of technique. Martial arts exist since millenia, yet only a hand of true masters of each discipline can be found to this day.
A painter might be happy and lucky with contemporary art (which fully accepts shit), but that's not going to help reach a market, safe make moustache twirlers and tea drinkers get warm in their pants, eventually.
Of course, if you look at the industry outside of the castrating actual scheme of console manufacturers, then yes, it's all good news. Who knows? Maybe new alternative business models might burgeon, and even settle on gaming systems considered marginal or outdated?
Systems simpler than a PC, but as free as a PC, with little to no boring approvals?
But I'm still skeptic on the quality of games. Portal still was the sum of talents and knowledgeable people, not your average Joe pushing a mouse and filling texture placeholders with bitmaps of pets and friends.
Now, I say we don't have enough hand drawn 2D games with splendid flowing animations.