Take off the nostalgia glasses. Games aren't just for the two nerds sitting in the corner. Now you have Grandma playing Wii Sports, little Junior playing Kirby on his DS, Tommy the college student playing everything, Tina the otherwise non-gamer sister playing The Sims...switch up the roles, but however you allocate them, everyone is a gamer these days, even if it's only Wii Tennis. Gamers are not dumber; you're just seeing more of the average population, rather than the very smart right side of the bell curve, playing games. You're also claiming, as far as I can tell, that some genres are "dumber" than others, when in fact there are some pretty deep and intense FPS games and some really stupid puzzlers. You can't judge a game by its genre, and Sim City was not the Holy Grail of video games, no matter what your rosy spectacles want to tell you.
On the glut of FPSes...go watch Extra Credits' first mailbag session. FPSes are numerous because people like them and they're easy to make via some widespread pre-made engines. Sooner or later, something else will take its place. Meh.
Here's one more thing to increase your faith in gamers' willingness to put forth mental effort and not just throw blood around. One of the most popular games ever is a puzzle game where you never fire a single bullet: Portal.