How to create a "fair and balanced" video game experience

Anyone interested in this should check out Jenova Chen's thesis on Flow (which is the application of Flow Theory on games).

http://www.jenovachen.com/flowingames/foundation.htm

http://en.wikipedia.org/wiki/Flow_(psychology)

In particular the three rules that Chen lays out:

   1.  As a premise, the game is intrinsically rewarding, and the player is up to play the game.
   2. The game offers right amount of challenges to match with the player’s ability, which allows him/her to delve deeply into the game.
   3. The player needs to feel a sense of personal control over the game activity.

Raph Koster also focuses on the same issues in his very accessible book A Theory of Fun.