It's possible to limit the level of time sink involved in playing video games; you just have to pick the right game and the right play schedule.

My best example: Civilization IV multiplayer. Since there's a limited number of things you can do on any given turn, and since the multiplayer can be done asynchronously, everyone can simply agree to a rule like "we play one turn each morning and one each night", and then (after a single synchronous night getting past all the ultra-short initial turns) there's no way to spend more than 30 minutes or so a day on the game. Granted, each game takes a few months...

And Civ IV is at least as interesting and instructive as the Prisoners' Dilemma simulations investigated here recently. It's been years since I played, and I still have fond memories of teaching a friend that "Let's all gang up on the guy in first place" is not a safe strategy to share with someone who's in second place but who's thinking more than one step ahead.

I'd also say that multiplayer games are a good way to socialize, which is important, but there is the caveat that you have to learn to separate your impressions of someone as a person from your impressions of them as a player. I'm far more trustworthy in real life than as a player in games where "betrayal" is a possible strategy, for example, and I've known people for whom the opposite was tragically true.