You should take this question over to escapistmagazine.com
Anyway, the effects can be good or bad. If you're ignoring the ESRB ratings and letting them play Mature rated games, there's often a lot of excessive violence and occasionally some sexual content. Games rated T for Teen are usually a lot of fun. Video games in general excersize a players spacial awareness (especially FPS), critical thinking, and quick decision making. Some games are more educational than others of course. There's plenty of fun puzzle games that can cause quite a bit of head scratching.
Of course there's also a lot of shitty, shitty games that are to be avoided. Like anything, doing some research is good.
There's some studies that say positive things some say negative things... just like with most mediums.
I'd say if it's between watching tv and movies or playing games, you get a lot more out of games. Games can easily be more emotional to the player than a movie. While you can relate to a movie character, you can also relate to the in-game avatar but on top of that the player is the one in control so it's more personal. It's a whole different experience if you find the right games.