That doesn't automatically make them bad. When I was a child people used to lament how toys were increasingly made of plastic instead of wood or metal. The world didn't tilt off its axis ;-)
My motto with these things is "All things in moderation." I have no problem letting my son watch a DVD on a long drive, as long as it's not the *only* thing he does. I remember how miserable long road trips could be, and I wish I had had the option of watching a movie.
Clinging to the idea that childhood experiences should be frozen in time is a recipe for frustration for both child and parent.
All that being said, I wouldn't mount a DVD player permanently in my car, because I want it to be a special treat reserved for longer trips. Friends of ours with the built in ones report that their children want to watch DVDs even on short trips across town.

I distinctly ordered the antarctic blue super sports wagon with the CB and the optional family fun pack
2002 S6 Avant [Ming/Silver] with:
* RNS-E
* Parrot CK3000 BT HF kit
* V1 with ADR remote display
* Carbon fiber dash trim
* RS6 Silver leather sport seats
* RS6 air-leather paddle shift steering wheel
* 18" RS6 5 spoke reps (summer)
She's got a 2007 A6 Avant [Quartz Gray/Light Gray] totally stock