I have my own theory on video game sex: it looks like two mailboxes clanging together. BioShock creator Ken Levine has something a little more humanoid in mind.
Here's the crux of it, and it's something I wish more developers enforced: if you can't make something look or feel good/real, then don't do it. Your Hollywood impulses might be telling you a game needs a sex scene, but if all you can make it look like is two puppets banging faces then you're better off having them just hold hands.
This rule also applies to smoking. The Illusive Man in Mass Effect 2 did not look like a man smoking. He looked like a machine that, if I walked along the promenade in 1936, I could put a nickel in and see it raise its mechanical arm to its mouth in a crude simulation of "smoking".