Nice point Kr0nix, If we are walking by an A&B store, or flipping through a magazine, or even watching a bo-flex commercial. The majority of us (males) don't raise hell about a half naked toned male, we turn away, simply laugh, or im some cases feel guilty about our bodies.
It is our biology that makes us excited to see a beatiful woman, I mean who can help the fact that a beatiful woman is a nice "THING" to look at. The whole point of our being on Earth is to reproduce, so why not use it to sell?
Kids don't need this kind of stuff growing up though. I'm sure they'll experience it one way or another being a child but a tycoon game of all games isnt going to turn them into a sick twisted individual. I'm sure this game will have little or pixelated nudity. Now If this was about Virtual Valerie 3 hitting the shelves well I think it would be worse.
On the part of the government raising our children. Well they control all they learn in school, all they watch on tv, and just about everything else they'll experience in their childhood. The US school system is extremely messed up but that's a different topic.
These are all my opinions so I could be wrong;)
~Halo