Violence as been accepted for so long in video games, but what is slowly emerging in games are choices which can lead to extreme violence. I still remember the reactions when the first Mortal Kombat was released or the 1988 midway classic NARC. You could blow a guy with a 12 gauge gun in that game and there was a lot of blood as a result.
Today, those games may not seem that violent, violence has taken a new step in games like god of war or Manhunt. While in God of War, you slice monsters, which is .. good, in Manhunt you kill man and you can kill them in some very violent ways. Trapt was a good example of a weird concept, an original one but leading to some violent kills.
Violence is somehow glorified in games... have you played Madworld? This is really mad and guess what? I enjoyed it. The mechanics were really good and the graphics were pretty solid. However when I first saw the trailer of this game I thought "Man! How could a company like Sega dare to put out something that violent?" ... the answer is simple. They just did.
I enjoyed those games, but it seems that the level has increased.. or has it? Remembre the finish moves in Mortal Kombat... they were something. You could rip of the heart or the spine of your opponent.
One thing is different. The level of realism has increased a lot. With full HD display and 5.1 sound, the experience is there to keep you on the edge of your seat. But are we heading towards games which would include mad possibilities with a level of realism which could lead to "live" that experience? Let's take cannibalism, someone could implement parts of the gameplay of a game tied in with a story twist which would lead to the player making the choice to do cannibalism. (you have to sacrifice somone in the fire in God of War...). Would someone invent a peripheral which could give you the "taste" of your actions? ... (I'm having nausea)
Since that could lead to a shocking choices to make, every player which would go towards the end would make the choice.
And if you had to rape someone? Or kill a baby... There was game which include rape in Asia. It has been banned but it still exists.
I don't think games need to go further in the fields of violence and sexuality. This doesn't give a better gameplay. But it may happen eventually. I think the movies are soon to attain some kind of top level of violence. There's been movies like Saw or The Hostel which were about torture and choices and I think the video game industry will reach for that as well.
Of course there are cases like Heavy Rain which implemented a steamy scene but I think it may serve the story somehow very well. This game is like a movie. And it was done like it happens every day between attracted people.
For having a violent sexuality and/or implement gameplay involving deviant behavior... I'm still asking do we need cannibalism and sodomy in video games? I really don't think so... however (unfortunately), it may happen in the near future.