Free Market + Government Intervention & Punishment + Taxpayers Dollers = LOLFAILWHALE ECONOMY
Free Market + Government Suggestion & Aid + Taxpayer Dollers = Working Economy
A "hey, we're probably going to have to sue you if you do this" seems equally like "suggestion" to me. This is part of how the contours of what's permissible and what's not get drawn, and companies in the future will look at this and say "Google and Yahoo went this far, but got warned off. To what extent is our deal like that one?"
Settle now. Pay the plaintiff's attorneys, pay the heads of the class action, and make the pedals available for, say, another year.
Almost by definition, it can't be much more expensive than fighting the lawsuit out, and it would make people feel a lot better about buying from the Rock Band franchise in the future.
A list is only as strong as its weakest link. -- Don Knuth