Call me conservative also, but I think libraries should be places of knowledge. I think the intentions of the Toronto libraries are good, but 'getting kids through the door with video games' is IMO naive -- as in it doesn't work like that (from my experience).
When pop CDs/DVDs were introduced at my local library, it slowly turned into a 'hang-out' space where chatter was ok because the librarians didn't want to confront or play the 'stickler librarian' role. Did it achieve the goal of getting non-readers into the library? Yes. Did they read anything? Nope. Did it make the library less conducive place for reading and studying? Yes.
One thing that this idea reminds me of is 'kids sections' in libraries. The rationale is 'get 'em while there young', with colorful kids motifs and toys, the adults can put up with some squealing and crying in the library... The reality is that noisy uncontrolled kids shouldn't be anywhere near a library, they can get their Barney fix elsewhere.
I hold the belief that books are the best communicators of information, as it requires active concentration and everything has to at least get parsed. I think a library should be about knowledge (incl. internet), and particular the best knowledge source the book, and since it is a place for reading, it goes hand in hand with reading for enjoyment, and therefore all books.
Don't degrade the libraries, instead closely monitor children's reading in school so that any reading problems are caught early so that they can have the enjoyment and appreciation of books. But I guess that is more resource intensive, longer-term commitment to individuals and probably requires parental involvement.