I've been having a look at various forums and sites discussing the topic.
On one forum, a game discussed in particular is Dead Space, which features no cut-scenes. Apparently this was done intentionally so that at all times, the player feels like they could be attacked at any moment - the feeling of apprehension and suspense that the player is experiencing throughout the game is never broken by a cut-scene, even whilst engaging in dialogue with other characters. This increases immersion for the player. However, others said that adding cut-scenes to this game would have given the opportunity to showcase the characters and their personalities more clearly, and went further to say that they'd forgotten what many of the characters were even like.
It was suggested that a cut-scenes effectiveness depends on the game's genre. One person stated that Half-Life, which has no cut-scenes, essentially made using them in first-person shooter games "taboo". However they are still effective in RPG's where they can really help drive narrative and lore-heavy games.
They can be overdone, as is arguably the case for some of the Metal Gear games where you can be sat watching a cinematic for about half an hour - but they may also be there as a welcome break from intense gameplay, and to make the story clearer. For example, a character may be talking to you within a game giving vital information, whilst at the same time you are having to fight enemies. You may be too focussed on defeating enemies that you miss what information you've been told. A cut-scene ensures that you follow more complex narratives and understand what is going on around you, whilst also making the game feel more dramatic and emotional.
Personally, I think they can be at wildly differing levels of effectiveness depending on the game. I find that if you are in control of a character during a particularly dramatic moment (that might usually have been put into a cut scene), it can be some of the most exciting aspects of a game. Yet, also, because of the lack of traditional film techniques such as cuts and dynamic camera angles/movement, close-ups, etc. you possibly lose some of the emotional impact that the scene might have if presented as a cinematic.
My experience of video games is still shamefully limited considering I consider myself a game student, but looking back on those that I have played, it is easy to see that it is impossible to draw such a black-and-white opinion of games. Simply, for some, it works - whilst others, don't.
I largely play RPGs, which are known to be the most dialogue-heavy, and it seems that dialogue within them hasn't evolved much over the years - often your character doesn't speak, and you simply listen to NPC's tell you pages and pages worth of information. One of the most jarring things for me in the Elder Scrolls games, especially Skyrim which sought to be so close to realism, was the dialogue and how it was presented (a similar thing can be said for Fallout 3). Because the entire game is from your character's perspective, whilst engaging in dialogue with somebody you will simply have their face on the screen, talking, often for very long periods of time, with limited movements and facial expressions on their part. Because of the lack of "cinematic" presentation of characters, they can often become forgettable and not feel as in-depth and meaningful as they could possibly be.
I can compare this to Bioware's style, such as in Dragon Age: Origins, which is again very heavy on dialogue, but uses close-ups, switching cameras, and more movement and visual indicators of a character's personality, which led me to feel a lot more of a connection to the characters and care more for the story. Dragon Age 2 also featured a talking protagonist (the effectiveness of which is a whole other debate), so choosing how our character interacts with others, and seeing it presented cinematically, I think is a very good way to get a better idea of their personality and quirks.
Dragon Age 2's use of cinematic techniques during dialogue scenes helps effectively portray the characters' emotions and personalities
I suppose I can summarise by saying that I feel that action-oriented scenes should be part of the gameplay, as that adds more variation from just running through various areas and killing enemies. However, I think dialogue and character presentation is more effective when it is presented cinematically, as I think it's difficult to express a character properly if they just stand and talk at you. With the advancement of technology, though, we can see that characters are being presented more dynamically from first-person perspectives (I'm curious to see what Elizabeth in the upcoming Bioshock Infinite is like).
Well, this has probably been a very rambling blog post so I'll stop now, although I do find it interesting to think of how I'd present my game cinematic if I was actually making it as a playable game. On the one hand I suppose it would feel more personal and immersive if it was entirely up to the player where they wished to wander, and if the whole scene where they happened across a mysterious robot was entirely from a controllable, first-person perspective as opposed to being presented as a cut-scene.
As with anything else, I suppose there is no perfect solution and everybody has preferences - for me, the most important aspect is to make sure characters are being presented interestingly and in a way that reflects their personality, as I personally play a game to experience an interactive story and it's characters, rather than to just challenge myself with difficult gameplay.