As for our kids, we found that the TV is amazingly effective at teaching them, notably for reading skills. That catchy "The B says 'Buh'" song (and its 25 friends) was something that totally helped them remember how to sound out words. Our eight year old reads like a demon now, and the five year old is a beginning reader (he started slower than his older brother, but he's doing fine). The current three year old is recognizing letters and clearly interested in reading on her own.
It's not like we don't read to them or teach them, too--but it's quite obvious to us that the TV is scarily effective at getting messages across. If you think about it, that's what it's designed to do. We just choose to use it primarily for good and limit the undesirable effects.
Oh, and you should totally see my daughter figure out tangram puzzles on the iphone/ipod. She rocks at it. Yeah, they like to do stuff that's not challenging, too (come to think of it, I do too sometimes!). But I'm the parent: I get a say into how this stuff is used, and I'm going to use every tool that I can.