It IS bad for developers because retailers like Gamestop and EB will put used copies on the shelf immediately on launch whenever they get them in, and for a few bucks less. They get a 100% profit, with none of the proceeds going to the developer (which is fine, but it's important to remember that you're not their customer by buying a used copy of a game). It cannibalizes initial sales during the most important time of a game's release, especially when you consider that frequent used game buyers will opt into things like Gamestop/EB's Edge card system, getting an additional 10% off the sticker price.
If the motion picture industry let retailers rent/sell copies of movies at the same time as theatrical release, then the financial bottom would be eaten out from under the theatrical aspect of the industry, which is usually the most important and most profitable portion of a film's release. This is the reason why the motion picture industry delays home video releases of new films, and this is what should be done with games, too.
I've heard arguments against that, people saying "Oh, well, I should be able to sell it if I want to", and that's fine, really; What needs to be regulated is not people selling games back or trading them in, but the amount of time needed before used copies start showing up on retail shelves alongside new copies. The only problem is, retailers are unlikely to agree to something like that unless forced to, since they can sell a $70 game for $65 for 100% profit. Waiting until later gains them less. Which is sort of why the game industry almost needs a standards board for this kind of thing... Something, though I shudder to say it, like the RIAA/MPAA (because, besides suing people for downloading media, that's part of what they do).