I have personal issues with dynamic difficulty adjustment. Resident Evil 4 employed it, and every time I died, I would exit out and reload my save file rather than press "try again." In video games, I expect to fail a few times. That's the point. Video games take full advantage of the adage, "if at first you don't succeed, try, try again." Dynamic difficulty systems undermine my ability to learn and to eventually succeed. At the very least, games should give you the option to turn off dynamic difficulty. I'm currently playing through the new Prince of Persia, and I'm a fan of its respawn system. If you die, you are automatically brought back to the most recent time you touched ground. And during bass battles, Elika automatically saves you when you lose, and you're put right back in the fight, except the boss regains a good chunk of health. Part of the reason this system works is because the game has a uniform, baseline difficulty (super easy! zing!), meaning every players deals with the same levels and the same combat. For games like first-person-shooters, however, this may not work so well, and some sort of adjustable difficulty system might be advised. I remember playing some game recently, can't remember which, and having the option to change the difficulty at any time, which was really nice. Concerning Nintendo's Demo Play patent, I think what they're doing is a great idea. Nintendo is designing for its own crowd, parents, kids, most Wii owners who don't have the skill, time, or patience to put into mastering what could be considered a difficult. Additionally, Demo Play was show with New Super Mario Bros. Wii, and with four-player co-op, Demo Play will allow for the less skillful of the group to keep on playing while their friends or family figure it out for themselves. It is also important to remember that video games are a service for which consumers are paying; Demo Play is only allowing them to enjoy that service more if they get stuck. People play games for themselves, anyway; no self-respecting hardcore gamer is going to use Demo Play for a whole game and then say he or she conquered the game. Gamers like to be challenged, and will likely use Demo Play sparingly, but it also their right to use the system once they've stopped having fun.

I posted an analysis about WoW's addictiveness on my blog a bit ago. Have a look if you like:
http://invisiblestudio.blogspot.com/2008/08/worth-game.html