I actually would like to see sex and sexuality explored, and not in the cheap ways we find it now in games. Unlike many who've comment so far, I don't see much of a problem with a fully rendered cutscene that involves sex, so long as it does not ramp up into full scale pornography. I think that as long as it framed right, a sex can serve as a visual simulation of intimacy, which can help the story. I think really when sex in video games begins to turn me off is when it becomes gratuitous, or even a QTE (A la God of War). This really cheapens the experience of sex and replaces it with boyish idealism of conquering another objective, which quite frankly leaves me insulted to be playing the game.
I guess to sum it up, I'll quote James Porthow: "How can you have an art form that denies sexuality?" I think the point is that you cannot begin unravel a human experience until you explore this very part of our nature.
So in short, yes, I do believe sex should be included in some video games. But, I would like to see the video game industry treat it with a little bit more maturity.