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VERY - my step son has gained better grades for reading and literacy at school since discovering Little Big Planet. The chat on there has really helped him progress! My 20 month old can play memory games on the iPad (before anyone moans he is only on it for 20 minutes a day max). He also likes to draw pictures on the 'Pad - unfortunately I've had to remove his crayons as he insists on eating them.... the iPad is a great alternative! Nursery rhymes are much more fun when they are animated, especially things like Old MacDonald's farm!
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I think that very much depends on the game - many games are education, most are not. It should be about parent's educating themselves on what can be helpful and what can be harmful and monitoring online gaming accordingly.