... While some of these objections deserve attention — and their effects should be ameliorated when possible — I think that demanding that difficulty levels be "banned" from all games is throwing the baby out with the bathwater.

More importantly, Glassner's objections ignore the most important rule of game design of all: empathize with the player, i.e. provide what he wants. Players want settable difficulty levels, and removing them for purely theoretical reasons is not a good way to serve your audience.

He's got some interesting suggestions on how to implement dynamic difficulty settings, as well as potential fixes to some other issues or problems with difficulty levels.

The Designer's Notebook: Difficulty Modes and Dynamic Difficulty Adjustment [Gamasutra]

Once upon a time, games were competitors. Now, primarily, they're entertainers. They aimed to beat you. Now, to be beaten. Our language says much, really. While we've talked about difficulty curves forever, the problems now are "difficulty spikes." No one ever critiques a game for a difficulty-trough - because the former stops you getting anywhere and the latter is just something you coast throug

I'm not one of those gamers that particularly enjoys having my ass handed to me to the point where I simply cannot complete a game, though there are plenty of games that have challenged me to (my) max - I'm also the obsessive type, so the pattern of having side quests and optional challenges galore in my games of choice usually means I have more than enough to keep me busy. This question of balancing the commercial needs of AAA titles with what 'real' gamers (however you want to define that) want to see is an increasingly pressing problem — though not one that I expect will be resolved any time soon, other that to push more and more 'styles' of games towards the fringes.

Hard Times: The Future of Difficult Video Games