You make an excellent point about reaching the next generation. However, I tend to think of music games as the first shock wave in the aftermath of the initial "ogod napster, our monies are gone now!" freak out that happened years earlier. Artists, including legends, are getting pissed off that the music itself isn't what draws people anymore.
Why would you buy a CD that only works in a CD player, when you can get an MP3? Why would you download an MP3 for $.99, when you can download it on Rock Band and play along?
It's all about cash flow, unfortunately. When the sense of propriety goes away from an art form like music, the art loses a bit of its meaning (and hence value). Like how a chef's recipe doesn't taste the same when you make it at home, or how your oil-paint landscape will never look quite as good as the one Bob Ross is showing you how to make. (Note: I'm not trying to say that Rock Band is teaching people music. Just that Rock Band devalues the original art in a way.)