I recall a GTA clone a couple of years back, taking place in a ridiculously realistic (as far as I know) London, with ads for the new musical Mamma Mia every block, possibly more often than that. Now, I may be the only 20-something straight male on the face of the earth who actually enjoys ABBA music (Ma is a full Swede, I grew up listening to it), but gah! Enough already! I find it hard to believe any city would have that many advertisements for anything, let alone a musical. Product placement is distracting in that regard, and it detracts from whatever reality they're attempting to establish. Realistic product placement would likely be impossible too pull off, as I doubt Coca Cola and Pepsi, for example, would both pay to be featured in one game, but if some company manages to pull it off, I shall be happy. I don't doubt it helps defray the costs of bring us entertainment, but... okay, I can't think of a point here, but I still object.
Alright, I am limiting the above to the open world advertising. Advertising in sports games, as several have mentioned, is completely realistic, if a bit annoying. Then again, the real thing is annoying too, so I guess that adds to it.
However, as for advertising in GTA, forget it. That is clearly it's own little world, and the advertising it does have is for it's own creations, like Ammu-Nation. Most of GTA's ads are brilliantly executed, fit the game perfectly, and are not nearly as repetitive as... I can't find the name of the London-based GTA clone, Google has failed me. If anyone knows what it is, if only to save my own fragile sanity, help, and anyway, GTA games don't need it. Everything Rockstar touches (up to now anyway, maybe tomorrow when IV comes out will be different, but here's to hoping not) is solid gold, and so long as they keep selling 10's of millions of everything they make, real world ads shouldn't be a factor in what they do.