This question is not unique to the video game era. Society has been worried about the effects of violence in entertainment since the advent of movies and television. Gunplay in weekly westerns of the 50's, like Gunsmoke and Bonanza, engendered multitudes of debates on exactly what message we were sending to the youngest and most impressionable segments of our population.
What is beyond debate is that the levels of violence in all forms of entertainment, and our acceptance of it, has risen exponentially with each passing decade. When Clark Gable uttered the immortal line, "Frankly, Scarlett, I don't give a *censored*," in Gone With The Wind in 1939, the populace was stupefied. In 1960, audience members fainted when Janet Leigh was carved up by Anthony Perkins in the famous shower scene from Psycho, despite the fact the murder weapon was never shown entering Leigh's flesh, and the director used chocolate syrup to simulate her blood (movies were filmed in black and white in those days).
The question should be whether the entertainment industry has influenced the public over the intervening years, or whether we have implicitly demanded increasingly higher levels of violence and shock value in movies (and games) in our never ending quest to cross off one more item in the rapidly diminishing list of things we have never before seen. "Entertain us with novelty," has always been the battle cry of the pop culture consumer. The industry has always found a way to respond.
Is violence and our acceptance of it on the rise in everyday life? Likely. Are morals degrading? Perhaps. Are children more detached from the human condition due to the plethora of video games and television programming which allows us to be entertained with no requirement whatsoever for social interaction? The studies tell us nothing.
But if violence in the media is the chicken, and tolerance of it is the egg, the argument as to which one came first will soldier on, unresolved, for years to come. I, for one, believe the two go hand in hand, and in the end we are all poorer for it.