Games as Art (capitalized)...
Sometimes it's more the fault of the one behind the controller/keyboard when a game experience falls below the point that a game could be considered 'Art' rather than just a game. If a bystander can sit and have an emotional connection to the game being played, then I certainly consider that game to have faded the line between the two (Note: In this case I'm referring to more 'Cinematic Art', like a good film... There is also 'Audio/Visual' art, the kind you can just sit/stand there and take in.) However, if the one playing can't keep progressing forward without having to repeat some arbitrary segment, then the bystander's experience will most often be lessened for it. (I'm looking at you, Uncharted2, and your end boss fight and bridge race... You're only forgiven because it was LITERALLY the end.)
My list, for what it's worth...
MYST Series - from the first game on the PC, then Riven on the PSX, and finally tracking down the whole series for one giant binge session over a month, this series always gripped with an acceptable storyline, unique puzzles and absolutely amazing environments.
7th Guest / Eleventh Hour - arguably a MYST clone, but the storyline, creepy environment, and sinister tauntings of Faust made this another gripping puzzle game for me and the whole family.
Today, I think that the only element to the detriment of the above games is technology in general... Computers have to be wrestled with to get these old classics to run, and the production quality, though cutting edge for the time, can be seen as seriously substandard.
Uncharted Series (both Drake's Fortune & Among Thieves) - In simplest terms, the weeks of playing these two games was one of the best movie experiences my children and I (and wife, here and there) have had together. The pacing was outstanding, the tension palpable at times, and the camera and gameplay melded perfectly. With only a few exceptions, noted in the intro, this was one of the best games for both the player and the observer.
Rez - This techno/rave shooter is both visually and auditorily stimulating, but also, with an imported accessory, tactile as well (we'll get to this later, since it's not really a basis for my opinion of Rez being Art). The visuals are vibrant, the environmental sounds (enemies, shooting, powerups, etc.) almost musical in quality, all with thumping bass and rave dj mixes setting the tone of the frenetic gameplay.
Now, as to the rumblepack accessory, I'd suggest tracking down the Game Girl Advance article on the subject. I'm sure it has to be archived somewhere... For me, the exchange went pretty much like this: (playing Rez in livingroom when wife comes in) "Whatcha playing?" "New game... Here. Hold this a sec." ::toss her the rumble pack:: "What? Oh, woah..."