Very recent topic about Traditional AI and Game AI, and what is best for entertainment in games.
http://altdevblogaday.com/2011/07/11/students-game-ai-vs-traditional-ai/
We are still very far behind in terms of "good AI"; Game developers tend to avoid Traditional AI
"Game Developers don't get paid to be clever" - most of the stuff in games today are just tricks, smokes and mirrors, designed to increase believability and make for better games.
The important part is to make a fun and compelling game. Traditional AI takes lots of time and memory, and it doesn't even get used much.
