There are many games which have very explicit sixual content, they're not wildly popular because they're not marketable, but they do exist. Just because you feel differently doesn't mean the market should bend to your will.
Yes, but the fact that they're not marketable is largely because of censorship (i.e., the rating boards) in the U.S. If the ESRB decides your game goes from "M" to "AO" then virtually no major retailer will carry your game and you'll virtually no avenues for marketing your game (magazines, tv, etc.).
And the point of the OP, I think, is that with the exception of explicit [censored] or violence involving children, the *only* thing that'll bump a game from "M" to "AO" is nudity and/or six. Further, even in the US, this doesn't make much sense when considering that R-rated (vs. X-rated) movies can and do contain significant amounts of nudity (about the only thing they can't show is penetration).
The rationalization that it's because the ESRB is trying to protect kids from their ignorant parents either means the MPAA rating board is shamelessly not protecting kids from their parents, or that the ESRB ridiculously thinks kids need protection from exposure to nudity, but almost any amount of violence is dandy. This rationalization really falls apart when you consider what the point of a rating system is at all if "Mature", which is supposed to mean 17+, is actually worried about a prepubascent's exposure to said content.
From a reasonable standpoint, whether morally, ethically, or psychologically, it makes little sense that nudity will cause significantly more trauma than violence. And even if a child *were* equally traumatized by exposure to both, I'm much more afraid of the child who grows desensitized to violence than one desensitized to nudity or six.
JMHO, of course.