interview with Warren Spector on GamesIndustry International, which among other things talked about his opinion that the violence in games has just gotten completely out of hand. (I recommend you check it out; there's also some interesting stuff about Epic Mickey 2 in there.) Having seen a wide selection of the newest games at E3, I can't really argue with that. There's some really graphic violence out there, and in many cases it seems to be used for shock value and as a way to get attention.
I see this as a classic example of the tragedy of the commons (I actually took a population ecology class from Garrett Hardin a few years after he wrote this paper). Essentially, doing an ultraviolent game has some incremental benefit to the company that does it (or at least, they think so); it gets them expanded attention and hopefully greater sales. At the same time, it damages the entire game industry, by creating a worse impression of games overall. Which leads to more attempts to regulate games and keep them away from kids. That damage is diffuse and hard to quantify, and occurs over a period of years, so it has minimal meaning to a company that's purely focused on numbers day-to-day. Thus individual companies can conclude that increasing ultraviolence in games is in their best interest.
Hopefully companies will exercise some judgment, but that's more likely if people take a stand and say No, I won't buy this. Look, there should be plenty of shooters out there to choose from; you should still be able to shoot things and have fun while still avoided games that go too far over the top.
Sadly, designing a game where you kill things is easier than designing a game where you have more nuanced considerations. Weapons use is pretty mechanical and easy to figure out; emotions and human conflict are much, much trickier. Still, there are plenty of interesting games being created out there with unusual and interesting mechanics. At E3 I saw Pikmin 3 on the Wii U, and it looked like a lot of fun. Even without spurting blood.