I see where you're coming from, guyjin, but I don't think the good to crap ratio has gotten any worse. The 2600 was plagued with boring originals and derivative junk - just like today's consoles.
As far as outright quality goes, things are so much better nowadays. Before the internet, and especially before game magazines, games that were virtually unplayable shit were really common. Now they are extremely rare. Try releasing ET, Circus Lido, or Rise of the Robots today.
I think what Nolan is bothered by is the sex, violence, etc in crap like 50 Cent Bullet Proof, GTA, State of Emergency, Manhunt, etc. That stuff is "trash", even if its very playable. If those were the only kind of games out nowadays, I'd just wouldn't play any new games. The truth is we also have good stuff like Guitar Hero, Animal Crossing, etc, and some of the "newer" games (newer as seen by old dudes) have been amazing experiences for me; Rez, Sakura Wars 3, Mother 3, Astro Boy: Omega Factor, and many others.
I think he probably just saw a guy playing Manhunt or some other such snuff material, which is enough to ruin anyones outlook on games.
Either that or Madden...