My nieces are from Uruguay where the OLPC computer is highly utilized in the educational system. It has enabled them to become familiar with computers in a functional way and has been very good for them. Granted they have good parental oversight and are greatly encouraged to use it to learn with.
I guess that last sentence says it all. If kids are encouraged to use a computer in a useful way they will. If parents just want it to be a babysitter then I guess that mind numbing "entertainment" IS all it is good for. Like all computer/kid issues, it boils down to the parents.