That depends on how much TV they are watching as well. I think it needs to be rather 'how much screen time' are they allowed - computer games, tv, internet. They should be allowed an overall amount of time for all of them, and they can decide how the distribute it. It also depends on how old the kids are, and whether it is a school week/day or holidays/weekend.
I agree with Bryony, games are great in moderation, but it's overall screen time that should be moderated. When coupled with reading and other educational activities, gaming can tie in wonderfully to help expand a child's horizons. Most issues seem to come from children only playing games and doing nothing else, or allowing kids to play games that are rated 18+.