And also, what is the current state of gaming, and what does the future have in store?

They have both helped and damaged.

Advantages:
They have provide a huge market for publishers to target, this in turn has provide all the companies with significantly more money then they ever used to get.
They have majorly impacted on the complexity of games, so that games are easier to get into. Just look at something like Daggerfall even, that is not a easy game to start playing.
They have helped move gaming from a child's toy to an accepted relaxation tool.

Disadvantages:
Because the casual market is so huge, the old-time 'hardcoe' gamers are often left when decisions are made.
Beacuse of the fear that casuals wouldn't want to shell out for a new console, it has held back hardware and games power in general
Rather then games being simple to play, hard to master, most are just simple to play from developers missing the point.
The rise of the Blockbuster game, where tens of millions are spent on a single that is a clone of an existing product.


In all, without them the industry would be struggling, with them we get 'blockbuster' games that are fun to play, but often are too short and easy to be worth the money we have to pay. There is not YES/NO answer to this question, and anyone who thinkis there is has not looked at the question fully.

In the future casual gamers will move away from console and to smart phones for their gaming fix, as they already have a smart phone. I feel the first company to make a good FPS game on a smart phone will crush the market as the new Halo/Call of Duty. WHat will this mean for PC games? either we'll start getting phone ports (*shudder*) or the industry will have to dramatically downsize or collapse and the visual quality that we are used to will drop or not advance.

ANGRY BIRDS!

Hurt a ton.. Games generally have weaker stories, oversimplification, and are mainstreamed.. Developers also poor tons of money into advertising rather than placing that money into their game.. Witcher 2 only had a budget of 8 million.. That includes making a new engine.. A game like Skyrim had about 100 million and Call of Duty games have a budget of like 200 million.. Also dev studios have became more of a business rather than a place of game development.. Which leads to simplification of development..

Casual gamers are a double edged sword. While they dish out the revenue for developers to develop more games they also take up a huge majority of the market. Most are only looking for a game to spend a few hours on and get a little excitement without too much difficulty. While the hardcoe gamer looks for a game that will last and gives excitement but only after it has been earned. Since casual gamers are the majority the developers are 9/10 going to cater to them to get that income.

Neither.

They're a genre which appeals to its own demographic, so it's neither helped nor hurt things as a whole.

The players themselves decide what sort of games are made based on what they tend to float towards in terms of game genres. If the games aren't being played, no one would waste the money to produce them.